What constitutes a transfer of control of the Black Bear Diner developer?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2.1 If Developer is a corporation, limited liability company, partnership, or limited liability partnership, each principal of Developer with at least a ten percent (10%) equity ownership interest in Developer ("Principal"), and the interest of each Principal in Developer, is identified in Exhibit C hereto.
Developer represents and warrants that its owners are as set forth on Exhibit C attached to this Agreement, and covenants that it will not permit the identity of such owners, or their respective interests in Developer, to change without complying with this Agreement.
Franchisor shall have the right to designate any person or entity which owns a direct or indirect interest in Developer as a Principal, and Exhibit C shall be so amended automatically upon notice thereof to Developer.
Throughout the term of this Agreement, Franchisor shall have a continuing right to designate as a Principal any person or entity that owns a direct or indirect interest in Developer.
- 7.2.2 This Agreement has been entered into by Franchisor in reliance upon and in consideration of the individual or collective character, reputation, skill, attitude, business ability, and financial capacity of Developer or, if applicable, its Principals who will actively and substantially participate in the development, ownership and operation of the Black Bear Diner restaurants.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, if the developer is a corporation, limited liability company, partnership, or limited liability partnership, each principal with at least a ten percent equity ownership interest is identified in Exhibit C. The developer must maintain the identity of these owners and their respective interests as stated in Exhibit C.
Black Bear Diner retains the right to designate any person or entity owning a direct or indirect interest in the developer as a Principal, which will automatically amend Exhibit C upon notice to the developer. This means that throughout the agreement's term, Black Bear Diner can continuously designate new Principals based on ownership interests.
The agreement between Black Bear Diner and the developer is based on the character, reputation, skills, business ability, and financial capacity of the developer and its Principals. Therefore, any change in ownership or control must comply with the terms of the Development Agreement to ensure these qualities are maintained. This is a standard practice in franchising to protect the brand and ensure consistent operation standards.