According to the Black Bear Diner FDD, how are distributions made?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
n activities reasonably related to the administration or direction of the Marketing Fund.
Each Black Bear Diner restaurant operated by Franchisor, or any affiliate of Franchisor, shall make contributions to the Marketing Fund equivalent to the contributions required of franchisees.
Although Franchisor intends the Marketing Fund to be of perpetual duration, Franchisor maintains the right to terminate the Marketing Fund. The Marketing Fund shall not be terminated, however, until all monies in the Marketing Fund have been expended for advertising and promotional purposes or returned to Franchisee on a pro rata basis.
An accounting of the operation of the Marketing Fund shall be prepared annually and shall be made available to Franchisee upon request. Franchisor reserves the right, at its option, to require that such annual accounting include an audit of the operation of the Marketing Fund prepared by an independent certified public accountant selected by Franchisor and prepared at the expense of the Marketing Fund.
Franchisee acknowledges that the Marketing Fund is not a trust and Franchisor assumes no fiduciary duty in administering the Marketing Fund.
11.3 Grand Opening Advertising
Franchisee is required and agrees to spend no less than FIVE THOUSAND FIVE HUNDRED DOLLARS ($5,500.00) sometime within one (1) week prior and eight (8) weeks following the opening of its Franchised Restaurant ("Grand Opening Advertising"). In addition, you must perform opening advertising as required by this paragraph every time that Franchisee relocates the Franchised Restaurant. All materials used on Grand Opening Advertising shall be subject to Franchisor's approval prior to its use. The Grand Opening Advertising shall be in addition to the Marketing Fund Contribution as required in Section 11.2; however, Franchisee shall receive a credit towards its Local Advertising requirement under Section 11.1.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the Marketing Fund is intended to be perpetual, but Black Bear Diner retains the right to terminate it. If terminated, all monies in the Marketing Fund must be used for advertising and promotional purposes or returned to the franchisees on a pro rata basis.
Black Bear Diner also operates a national advertising fund (NAF). The company receives funds from Black Bear Diner branded restaurants approximating 1.00% of revenue. These funds are physically segregated to ensure they are used specifically for advertising and brand development initiatives, as defined in the franchise agreements.
From time to time, Black Bear Diner uses franchisee funds for advertising purposes as reimbursement for its costs, including salaries and other internal costs of administering the NAF. These reimbursements totaled $172,139 and $118,881 for the years ended December 25, 2024 and December 27, 2023, respectively, and are netted within payroll and benefits expenses on the statements of income. The production costs of advertising are expensed when the advertisements are first aired or displayed, and all other advertising and promotional costs are expensed in the period incurred.
An accounting of the operation of the Marketing Fund is prepared annually and made available to franchisees upon request. Black Bear Diner reserves the right to require that the annual accounting include an audit of the operation of the Marketing Fund prepared by an independent certified public accountant selected by Black Bear Diner and prepared at the expense of the Marketing Fund. Franchisees acknowledge that the Marketing Fund is not a trust, and Black Bear Diner assumes no fiduciary duty in administering the Marketing Fund.