Regarding Boulder Designs franchise transfers, what legal issues involving the transferee would disqualify them?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
B. No such party has pending actions, other than routine litigation incidental to the business, which are significant in the context of the number of franchisees and the size,
nature, or financial condition of the franchise system or its business operations.
- C. No such party has been convicted of a felony or pleaded nolo contendere to a felony charge or, within the 10-year period immediately preceding the application for registration, has been convicted of or pleaded nolo contendere to a misdemeanor charge or has been the subject of a civil action alleging: violation of a franchise, antifraud, or securities law; fraud; embezzlement; fraudulent conversion or misappropriation of property; or unfair or deceptive practices or comparable allegations.
- D. No such party is subject to a currently effective injunctive or restrictive order or decree relating to the franchise, or under a Federal, State, or Canadian franchise, securities, antitrust, trade regulation, or trade practice law, resulting from a concluded or pending action or proceeding brought by a public agency; or is subject to any currently effective order of any national securities association or national securities exchange, as defined in the Securities and Exchange Act of 1934, suspending or expelling such person from membership in such association or exchange; or is subject to a currently effective injunctive or restrictive order relating to any other business activity as a result of an action brought by a public agency or department, including, without limitation, actions affecting a license as a real estate broker or sales agent.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 38–44)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, several legal and business-related issues could disqualify a potential transferee. Boulder Designs will assess the transferee to ensure they meet certain standards.
Specifically, Boulder Designs will disqualify a transferee if they have pending significant legal actions beyond routine litigation. This refers to actions that are significant considering the number of franchisees and the size, nature, or financial condition of the Boulder Designs franchise system.
Additionally, Boulder Designs will disqualify a transferee if they have a criminal record including a felony conviction or a plea of nolo contendere to a felony charge. It would also be disqualifying if, within the 10 years before applying, they were convicted of or pleaded nolo contendere to a misdemeanor charge, or were involved in a civil action alleging violations of franchise, antifraud, or securities laws, fraud, embezzlement, fraudulent conversion or misappropriation of property, or unfair or deceptive practices.
Finally, Boulder Designs will disqualify a transferee who is subject to an injunctive or restrictive order or decree related to the franchise, or under franchise, securities, antitrust, trade regulation, or trade practice law resulting from a concluded or pending action brought by a public agency. This also includes being subject to an order from a national securities association or exchange, or an injunctive or restrictive order related to any other business activity due to an action by a public agency.