Under what conditions can Boulder Designs call the loan and demand immediate payment?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
sixth paragraph.) If you do not pay on time, we can call the loan and demand immediate payment of the full outstanding balance and obtain court costs and attorneys' fees if a collection action is necessary. (Promissory Note, third and fourth paragraphs.) It is not our intent to sell, assign, or discount to a third party all or part of the financing arrangement.
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.
Source: Item 10 — FINANCING (FDD pages 23–24)
What This Means (2025 FDD)
According to Boulder Designs's 2025 Franchise Disclosure Document, if a franchisee does not make their payments on time, Boulder Designs has the right to call the loan and demand immediate payment of the full outstanding balance. In such a scenario, Boulder Designs can also obtain court costs and attorneys' fees if a collection action becomes necessary. Furthermore, Boulder Designs may terminate the franchise agreement if payments are not made on time. The franchisee also waives their rights to notice of a collection action and to assert any defenses against Boulder Designs.
This means that a prospective Boulder Designs franchisee needs to be aware of the strict payment terms associated with the financing offered by Boulder Designs. Failure to adhere to the payment schedule can result in serious financial and legal repercussions, including the acceleration of the loan, termination of the franchise, and responsibility for covering legal costs incurred by Boulder Designs in pursuing collection.
It is important to note that Boulder Designs may discount these notes to a third party, potentially limiting the franchisee's ability to raise defenses against payment. To ensure timely payments, Boulder Designs requires franchisees to sign and deliver an automatic bank withdrawal form for automatic withdrawals from their bank account. This highlights the importance of maintaining sufficient funds in the designated bank account to avoid triggering a default.
In addition to the equipment and supplies package being used as security, Boulder Designs may require a personal guaranty from one or more of the franchisee's owners. This means that the owner(s) would be personally liable for the debt, further emphasizing the financial risk involved. Prospective franchisees should carefully consider these factors and ensure they have a solid financial plan in place before entering into a franchise agreement with Boulder Designs.