What action can Black Bear Diner take if I fail to meet the development obligations?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Area Development Agreement | Summary | |
|---|---|---|---|
| h. | "Cause" defined (defaults which cannot be cured) | Section 8.1 and 9.1 | Non-curable defaults include: bankruptcy related events, any unapproved transfers, any material misrepresentations in the application for the Development Agreement; conviction of a felony; any unauthorized use of our Marks or Confidential Information; termination of a Franchise Agreement by us for cause or by you without cause; your failure to meet the development obligations. We can terminate the Development Agreement if we have delivered a notice of termination of a Franchise Agreement in accordance with its terms and conditions or you have terminated a Franchise Agreement without cause. |
| i. | Your obligation on termination/ non renewal | Section 9 | You have no further right to develop or operate any additional Franchised Restaurants; you may continue to own and operate all Franchised Restaurants under any existing Franchise Agreements; you must pay all amounts owed to us. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 41–46)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, if a developer fails to meet their development obligations under the Area Development Agreement, Black Bear Diner has the right to terminate the agreement. This is considered a non-curable default, meaning the developer does not have a period to correct the failure.
Upon termination of the Area Development Agreement, the developer loses the right to develop or operate any additional Black Bear Diner restaurants beyond those already under existing Franchise Agreements. However, the developer can continue to own and operate restaurants for which they already have Franchise Agreements, provided they fulfill all outstanding financial obligations to Black Bear Diner.
This policy underscores the importance of carefully assessing one's capacity to meet the development schedule outlined in the Area Development Agreement. Prospective developers should have a solid plan and adequate resources to fulfill their commitments, as failure to do so can result in the loss of future development rights. This is a standard clause in most Area Development Agreements in the franchise industry, designed to ensure that developers are committed to expanding the brand according to the agreed-upon schedule.