When do the restrictions regarding 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 the 2025 Boulder Designs FDD, a franchisee faces restrictions regarding dealings with former franchisees upon receiving notice that another franchisee's Franchise Agreement has expired or terminated. These restrictions are put in place because Boulder Designs acknowledges that former franchisees are in a position to compete unfairly with the franchisor, current franchisees, and other members of the Boulder Designs system. This unfair competition could significantly harm the reputation of the system and the proprietary marks associated with Boulder Designs.
The restrictions include not selling, loaning, or transferring confidential business information to former franchisees, including advertising materials, the operations manual, franchisee directories, customer lists, or any non-public information about the Boulder Designs business. Franchisees are also prohibited from referring prospective customers to former franchisees or assisting them in learning about franchisee meetings. If a franchisee observes a former franchisee using the Boulder Designs proprietary marks or operating from premises that still display the brand's identity, they must report this to Boulder Designs immediately.
In general, a Boulder Designs franchisee is expected to avoid any dealings with a former franchisee that they would not have with someone who has never been part of the Boulder Designs system. This is to prevent any potential misuse of confidential information or unfair competitive practices that could arise from the former franchisee's prior association with the brand. These measures are designed to protect the integrity and competitive advantage of the Boulder Designs franchise system.