Is the Development Fee refundable for a Black Bear Diner?
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 Fee is not refundable under any circumstances. If a franchisee signs a Development Agreement to develop multiple Black Bear Diner restaurants, they must pay a Development Fee equal to 50% of the initial Franchise Fee for each restaurant after the first. For example, if a franchisee agrees to develop 5 restaurants, they pay the full initial Franchise Fee of $55,000 for the first restaurant and a Development Fee for the remaining 4 restaurants.
The Development Fee is considered fully earned by Black Bear Diner upon payment, regardless of whether the franchisee fulfills their obligations under the Development Agreement. This means that even if the franchisee is unable to open all of the agreed-upon restaurants, they will not receive a refund of the Development Fees they have already paid. The total Development Fee for four restaurants in the example provided is $74,500, calculated as $22,500 + $20,000 + $16,000 + $16,000.
When the franchisee executes a Franchise Agreement for the second and subsequent restaurants, they will pay the Franchise Fee as outlined in the FDD, but they will receive a credit in the amount of the Development Fee already paid for that restaurant. Therefore, the balance due at the time of executing each subsequent Franchise Agreement will be 50% of the Franchise Fee. This arrangement allows Black Bear Diner to secure a commitment from the franchisee to develop multiple locations while providing a mechanism for the franchisee to recoup the Development Fees as they open each restaurant. However, the initial risk of non-refundable fees remains with the franchisee.