What does the Development Agreement contain regarding the operational status of each Black Bear Diner restaurant?
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, the Development Agreement includes a "Development Schedule" that specifies when each franchised restaurant must be operational. This schedule is a crucial component of the agreement, ensuring that franchisees commit to a timeline for opening their Black Bear Diner locations. Before signing the Development Agreement, the franchisor and franchisee will agree on the number of restaurants to be developed. For instance, if a franchisee commits to developing five Black Bear Diner restaurants within a defined territory, the Development Agreement will outline the specific dates by which each of those restaurants must be up and running.
This requirement has significant implications for prospective Black Bear Diner franchisees. It means that franchisees need to have a clear plan and the resources necessary to meet the agreed-upon development schedule. Failure to adhere to this schedule could potentially result in penalties or termination of the Development Agreement. The Development Schedule ensures that Black Bear Diner can strategically expand its brand presence and maintain consistent growth within a specific area.
In addition to the Development Schedule, franchisees must pay a Development Fee equal to 50% of the initial Franchise Fee for each restaurant they agree to develop after the first one. This fee is non-refundable, even if the franchisee fails to fulfill their obligations under the Development Agreement. For example, the Development Fee would be $74,500 ($22,500+$20,000+$16,000+$16,000) for four restaurants to be developed. This financial commitment underscores the seriousness of the development agreement and the importance of careful planning and execution by the franchisee.