Can Boulder Designs require a personal guarantee from the owners for the Promissory Note?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to providing a security in the collateral, we may require the Promissory Note to be guaranteed by one or more of your owners and we may require them to sign the Guaranty of Promissory Note attached as Exhibit 9 to the Franchise Agreement.
| Item Financed (Source) | Amount Financed | Down Payment | Max. Term (years) | Annual % Rate of Interest | Monthly Payment | Pre payme nt Penalty | Security Required | Liability upon Default | Loss of Legal Right on Default |
|---|---|---|---|---|---|---|---|---|---|
| Equipment and Supplies Package | Up to 50% of the cost of the package if it is new equipment, including any upgrades; up to 75% of the cost of the package if it is used or refurbished equipment | Depends on credit rating | 42 months | 8.5% | Principal and interest amortized over 42 months | None | Personal Guaranty; Security Agreeme nt | Call loan; Repossess equipment; Terminate franchise agreement | Waive demand, presentment for payment protest, notice of intent to accelerate, notice of acceleration |
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, Boulder Designs may require a personal guarantee from one or more of the owners for the Promissory Note. Specifically, in addition to securing the loan with the equipment and supplies package, Boulder Designs has the right to ask owners to sign a Guaranty of Promissory Note, which is attached as Exhibit 9 to the Franchise Agreement.
This requirement for a personal guarantee means that the owner(s) would be personally liable for the debt if the franchise fails to make payments. This is a fairly standard practice in franchising, especially for new franchisees or those with limited credit history. The personal guarantee provides Boulder Designs with additional security and recourse in case of default.
Furthermore, the table in Item 10 Financing also indicates that a personal guaranty is part of the security required when Boulder Designs finances the equipment and supplies package. The table specifies that Boulder Designs can finance up to 50% of the cost of new equipment or up to 75% of used or refurbished equipment. In the event of default, Boulder Designs can call the loan, repossess the equipment, and terminate the franchise agreement. The franchisee also waives certain legal rights, such as the right to demand or notice of intent to accelerate the debt.