Can Boulder Designs terminate the franchise agreement if payments are not made on time?
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, Boulder Designs can terminate the franchise agreement if a franchisee fails to make payments on time related to the financing of the equipment and supplies package. Specifically, if Boulder Designs provides financing for up to 50% (if new) or 75% (if used or refurbished) of the equipment and supplies package, non-payment can lead to termination.
If a franchisee does not pay on time, Boulder Designs has the right to call the loan and demand immediate payment of the full outstanding balance, including court costs and attorneys' fees if a collection action is necessary. The franchisee also waives their rights to notice of a collection action and to assert any defenses against Boulder Designs. To ensure timely payments, Boulder Designs requires franchisees to sign and deliver an automatic bank withdrawal form for automatic withdrawals from their bank account.
In addition to potentially terminating the franchise agreement, Boulder Designs can repossess the equipment. The loan obtained from Boulder Designs may require a personal guaranty and a security agreement. Boulder Designs also retains the right to discount these notes to a third party, who may be immune to any defenses the franchisee has against Boulder Designs.
This is a significant risk for franchisees, as failure to maintain timely payments can lead to the loss of their franchise and equipment, as well as potential legal action. Prospective franchisees should carefully consider their ability to meet the financial obligations and understand the terms of the Promissory Note and Security Agreement.