When do the restrictions on dealings with former franchisees apply to a Boulder Designs franchisee?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges that Former Franchisees are in a position to compete unfairly with Franchisor, Franchisee and/or other members of the System, and cause great injury to the reputation of the System and/or the Proprietary Marks. Franchisee therefore agrees as follows:
- i. Franchisee will not sell, loan, give or otherwise transfer or deliver to any Former Franchisee, or allow any Former Franchisee to copy or otherwise obtain, any confidential business information about the System; any advertising or promotional materials produced by Franchisor or which bear any of the Proprietary Marks; any other of our materials or publications, including, without limitation, the Manual; any directory or roster of franchisees or Approved Suppliers, any other customer lists or mailing lists pertaining in any way to the System; or any other information about the Boulder Designs Business or the System which is not available to the public;
- ii. Franchisee will not refer prospective Customers to any Former Franchisee;
- iii. Franchisee will not notify or advise any Former Franchisee of, or in any other way assist any Former Franchisee in learning about, the date, time and place of any meetings of franchisees;
- iv. If Franchisee observes any Former Franchisee using any of the Proprietary Marks in any way, or utilizing business premises or motor vehicles from which the Proprietary Marks and/or distinctive color scheme have not been completely obliterated, Franchisee shall immediately report such observation to Us, along with all details available to Franchisee;
- v. Franchisee shall, in general, have no dealings with a Former Franchisee which Franchisee, under this Agreement, could not have with a person who has never been a Boulder Designs Franchisee; and
- vi. The provisions of this Section 13.13 shall apply to Franchisee upon notice of the expiration or termination of another Franchisee's Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, a franchisee faces restrictions on dealings with former franchisees upon receiving notice that another franchisee's Franchise Agreement has expired or terminated. This means that once a Boulder Designs franchisee is informed about the end of another franchisee's agreement, they must adhere to specific limitations in their interactions.
The restrictions include not selling, loaning, or transferring confidential business information to former franchisees, and preventing them from accessing advertising materials, the operations manual, franchisee directories, customer lists, or any non-public information about the Boulder Designs business or system. Franchisees are also prohibited from referring prospective customers to former franchisees or assisting them in learning about franchisee meetings.
Furthermore, franchisees are obligated to report any observed use of Boulder Designs' proprietary marks by former franchisees, especially if the marks have not been completely removed from business premises or vehicles. In general, a franchisee should not engage in any dealings with a former franchisee that they would not have with someone who had never been part of the Boulder Designs system. This measure aims to protect the Boulder Designs system's reputation and proprietary information by preventing unfair competition from former franchisees.