What rights does a Boulder Designs franchisee waive related to collection actions?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
We may terminate your franchise if you do not make your payments on time. (Promissory Note, third paragraph.) You waive your rights to notice of a collection action and to assert any defenses to collection against us. (Promissory Note, third paragraph.) We may discount these notes to a third party who may be immune under the law to any defenses to payment you may have against us. (Promissory Note, third paragraph.) 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. To ensure timely payments of interest and principal, you must sign and deliver to us an automatic bank withdrawal form for automatic withdrawals on your bank account.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, if Boulder Designs provides financing for equipment and supplies, the franchisee waives certain rights related to collection actions. Specifically, the franchisee waives their rights to receive notice of a collection action and to assert any defenses against Boulder Designs in such an action. This waiver is part of the Promissory Note that franchisees must sign if they receive financing from Boulder Designs.
This means that if a Boulder Designs franchisee defaults on their financing payments, Boulder Designs can pursue collection actions without providing prior notice to the franchisee. Furthermore, the franchisee is prevented from raising any legal defenses they might have against the collection action. This could put the franchisee at a significant disadvantage in the event of a payment dispute or financial hardship.
Additionally, Boulder Designs has the right to sell or discount the promissory notes to a third party. If this occurs, the third party may be immune to any defenses the franchisee could have raised against Boulder Designs, further limiting the franchisee's legal options in case of a dispute. To mitigate the risk of default, Boulder Designs requires franchisees to authorize automatic bank withdrawals for payments. This ensures timely payments of interest and principal, reducing the likelihood of collection actions. The FDD also states that Boulder Designs may terminate the franchise agreement if payments are not made on time.