What is the effect of Black Bear Diner Franchisor's consent to a transfer on any existing claims?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
This Development Agreement and all rights hereunder can be assigned and transferred by Franchisor and, if so, shall be binding upon and inure to the benefit of Franchisor's successors and assigns; provided, however, that with respect to any assignment resulting in the subsequent performance by the assignee of the functions of Franchisor, the assignee shall assume the
obligations of Franchisor hereunder and Franchisor shall have no liability for the performance of any obligations contained in this Agreement after the effective date of such transfer or assignment.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Black Bear Diner Franchise Disclosure Document, the franchisor can assign and transfer the Development Agreement and all rights. If the assignment results in the assignee performing the franchisor's functions, the assignee must assume the franchisor's obligations. After the transfer, Black Bear Diner franchisor will not be liable for any obligations in the agreement from the effective date of the transfer or assignment.
For a prospective franchisee, this means that if Black Bear Diner transfers its rights and obligations to another entity, that new entity becomes responsible for fulfilling the franchisor's duties under the Development Agreement. However, the original franchisor is released from any further liability after the transfer date.
This clause protects Black Bear Diner from ongoing obligations if they sell the franchise system. Franchisees need to be aware that their contractual relationship would then be with the new entity, and any claims or issues arising after the transfer would need to be addressed with the new franchisor. It is common practice in franchising for franchisors to retain the right to transfer agreements, but franchisees should carefully evaluate the financial stability and reputation of any potential new franchisor.