What is the liability on default for the Decorating Den Interiors financing?
Decorating_Den_Interiors Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Item Financed: Portion | on of Initial Franchise Fee |
|---|---|
| Late Installment Fee (10 days after due date) | $50 plus any collection costs |
| Security Required | Personal Guarantee |
| Liability on Default | Full amount of remaining principal and interest, late installment fees, plus our collection costs including attorney fees |
| Loss of Legal Right on Default | Waive objection to Maryland court venue; waive right to counterclaim; waive right to jury trial (subject to state law) |
| Other Default Consequences (Note 3) | Termination of Franchise Agreemen |
Source: Item 10 — Financing (FDD pages 28–32)
What This Means (2025 FDD)
According to Decorating Den Interiors's 2025 Franchise Disclosure Document, if a franchisee defaults on their financing agreement with Decorating Den Interiors, they are liable for the full amount of the remaining principal and interest. In addition to the outstanding loan balance, the franchisee is also responsible for late installment fees and Decorating Den Interiors's collection costs, including attorney fees. This means that defaulting on the loan can result in significant financial obligations beyond the initial amount financed. Franchisees should carefully consider their ability to repay the loan before entering into a financing agreement with Decorating Den Interiors.
Furthermore, the document outlines additional consequences of default beyond monetary liabilities. A franchisee who defaults may be required to waive objections to Maryland court venue, waive the right to a counterclaim, and waive the right to a jury trial, although this is subject to state law. Decorating Den Interiors can also terminate the Franchise Agreement if a franchisee fails to make any payment within 10 days of the due date, and may declare the entire remaining balance of principal and interest immediately due and payable, subject to state law.
These terms are fairly standard in franchise financing agreements. The personal guarantee required by Decorating Den Interiors means that the franchisee's personal assets are at risk in case of default. The waiver of certain legal rights, such as the right to a jury trial, is also common but franchisees should be aware of these implications before signing the agreement. Prospective franchisees should consult with a legal and financial advisor to fully understand the terms and risks associated with the financing program offered by Decorating Den Interiors.