What must be agreed upon before signing the Development Agreement for a Black Bear Diner?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
12,000 |
You must pay a Development Fee equal to 50% of the initial Franchise Fee for each of the Franchised Restaurants you agree to develop after the first one. We and you will agree on the number of Franchised Restaurants to be developed before you sign the Development Agreement. In addition, the Development Agreement will contain a minimum "Development Schedule" which will specify when each of the Franchised Restaurants must be operational. For example, if you agree to develop 5 Franchised Restaurants within a specified Development Territory, you will sign a single Franchise Agreement and pay an initial Franchise Fee of $55,000 for the first Franchised Restaurant and sign a Development Agreement for the remaining 4 Franchised Restaurants. The Development Fee will be equal to 50% of the Franchise Fee for each Franchised Restaurant to be developed and as a result the total amount of the Development Fee would be $74,500 ($22,500+$20,000+$16,000+$16,000) for the four Franchised Restaurants to be developed. When you execute a Franchise Agreement for the second and each subsequent Franchised Restaurant, you will pay the Franchise Fee as stated in the chart above; however, you will receive a credit in the amount of the Development Fee you paid per Franchised Restaurant under the Development Agreement. As a result, your balance due at the time you execute each Franchise Agreement will be 50% of the Franchise Fee. The Development Fee is fully earned by us when paid, even if you do not fulfill your obligations under that agreement, and is not refundable under any circu
Source: Item 5 — INITIAL FEES (FDD pages 13–14)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, before signing a Development Agreement, both Black Bear Diner and the franchisee must agree on the number of franchised restaurants the franchisee will develop. The Development Agreement will also include a Development Schedule, specifying when each restaurant must become operational.
For example, if a franchisee agrees to develop five Black Bear Diner restaurants within a specific territory, they will sign a single Franchise Agreement and pay an initial franchise fee of $55,000 for the first restaurant. They will then sign a Development Agreement for the remaining four restaurants. A Development Fee, equal to 50% of the franchise fee for each restaurant to be developed, is required. In this example, the total Development Fee would be $74,500, calculated as $22,500 + $20,000 + $16,000 + $16,000 for the four restaurants.
When the franchisee executes a Franchise Agreement for the second and subsequent restaurants, they will pay the franchise fee as outlined in the FDD, but will receive a credit equal to the Development Fee already paid for that restaurant. This means the balance due at the time of each subsequent Franchise Agreement will be 50% of the franchise fee. It is important to note that the Development Fee is fully earned by Black Bear Diner upon payment and is non-refundable, even if the franchisee does not fulfill their obligations under the Development Agreement.