What agreement must the Controlled Entity assignee enter into with Black Bear Diner?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
This Development Agreement and all rights hereunder can be assigned and transferred by Franchisor and, if so, shall be binding upon and inure to the benefit of Franchisor's successors and assigns; provided, however, that with respect to any assignment resulting in the subsequent performance by the assignee of the functions of Franchisor, the assignee shall assume the
obligations of Franchisor hereunder and Franchisor shall have no liability for the performance of any obligations contained in this Agreement after the effective date of such transfer or assignment.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Black Bear Diner Franchise Disclosure Document, the document does not specify which agreement a Controlled Entity assignee must enter into with Black Bear Diner. The document does mention that the Development Agreement can be assigned and transferred by Black Bear Diner. In that case, the assignee would assume the obligations of Black Bear Diner under the agreement, and Black Bear Diner would have no liability for performance after the effective date of the transfer or assignment.
However, the FDD does not elaborate on the specific requirements or agreements involved when the franchisee (Developer) seeks to assign their rights to a controlled entity. The document outlines conditions related to the transfer of ownership interests within the Developer entity itself, requiring compliance with the agreement and potential amendments to Exhibit C, which lists the Principals. It also discusses the importance of the character, reputation, and abilities of the Developer's Principals.
To fully understand the process and requirements for assigning franchise rights to a controlled entity, a prospective franchisee should directly ask Black Bear Diner's franchise representatives. Specifically, they should inquire about the specific agreements, conditions, and qualifications that the controlled entity must meet to become an approved assignee. This will ensure they have a clear understanding of the obligations and potential challenges associated with such a transfer.