What is the relationship between the Boulder Designs Promissory Note and the Franchise Agreement?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisor terminates the Franchise Agreement dated as of the date hereof between Franchisor and (the "Franchise Agreement") for any of the reasons stated in Section 16.2 of the Franchise Agreement or, if Debtor fails to make a payment of principal, interest or any installment thereof when due, and such failure continues for a period of ten (10) days, Franchisor may declare the entire unpaid principal balance of, and all accrued but unpaid interest on, the indebtedness evidenced by this Note immediately due and payable without notice or demand, foreclose all liens and security interests securing
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the Promissory Note is directly linked to the Franchise Agreement. If Boulder Designs terminates the Franchise Agreement for reasons outlined in Section 16.2 of that agreement, or if the franchisee fails to make timely payments on the Promissory Note, Boulder Designs has the right to declare the entire unpaid balance of the note immediately due and payable. They can also foreclose on any liens or security interests securing the note.
This means that the franchisee's financial obligations under the Promissory Note are contingent upon maintaining a valid Franchise Agreement. A breach of the Franchise Agreement can trigger immediate repayment of the loan. The Promissory Note itself specifies that it is subject to the terms and conditions outlined within it.
Furthermore, the Guaranty and Assumption of Obligations document states that the franchisor, Boulder Designs, would not have entered into the Franchise Agreement without the guaranty in place. This highlights the importance of the guarantor's role in ensuring the franchisee's obligations are met under the Franchise Agreement.
In essence, the Promissory Note and the Franchise Agreement are interconnected. The Franchise Agreement establishes the operational and compliance framework for the Boulder Designs franchise, while the Promissory Note represents a financial obligation that is directly tied to the franchisee's adherence to the Franchise Agreement. A prospective franchisee should carefully review both documents to understand their rights and obligations.