What is the Black Bear Diner developer required to represent and warrant regarding its owners?
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 Black Bear Diner's 2025 Franchise Disclosure Document, if the developer is a corporation, limited liability company, partnership, or limited liability partnership, they must identify each principal with at least a ten percent equity ownership interest in the developer in Exhibit C of the Development Agreement.
The developer represents and warrants that the owners are as stated on Exhibit C. They also covenant that they will not allow the identity of these owners or their respective interests in the developer to change without complying with the Development 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 will automatically amend Exhibit C upon notice to the developer.
Black Bear Diner enters into the Development Agreement based on the individual or collective character, reputation, skill, attitude, business ability, and financial capacity of the developer or its principals. These principals are expected to actively and substantially participate in the development, ownership, and operation of the Black Bear Diner restaurants. This ensures that the franchisor relies on the identified individuals to maintain the brand's standards and operational success.