What constitutes a transfer of interest in the Black Bear Diner franchise agreement?
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, a transfer of interest can occur if the developer is a corporation, limited liability company, partnership, or limited liability partnership, and a principal with at least a ten percent equity ownership interest in the developer changes their interest. The principals of the developer are identified in Exhibit C of the agreement.
The agreement specifies that Black Bear Diner has entered into the agreement based on the character, reputation, skill, attitude, business ability, and financial capacity of the developer or its principals. Therefore, the developer must not allow the identity of its owners or their respective interests in the developer to change without complying with the agreement.
Black Bear Diner retains the right to designate any person or entity with a direct or indirect interest in the developer as a principal, which would automatically amend Exhibit C upon notice to the developer. This ongoing right allows Black Bear Diner to maintain control over who is considered a principal throughout the term of the agreement.