Is the Franchise Fee for a Black Bear Diner restaurant refundable?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 5: INITIAL FEES]
The Franchise Fee is paid to us in a lump sum at the time of signing the Franchise Agreement and is deemed to be fully earned upon receipt and is generally non-refundable. The Franchise Fee is uniform for all franchisees except if you develop multiple Franchised Restaurants under an Area Development Agreement described below. For our most recent fiscal year ended December 25, 2024, the initial Franchise Fee ranged from $24,000 to $55,000. The Franchise Fee is used to compensate us for training and other preopening obligations and is non-refundable under any circumstances.
Area Development Agreement. Under the Area Development Agreement, you are required to execute one Franchise Agreement and pay the Franchise Fee for the first Franchised Restaurant simultaneously with the execution of the Area Development Agreement. Under the terms of the Area Development Agreement, the Franchise Fee for each Franchised Restaurant is based on the number of Black Bear Diner restaurants you agree to develop according to the following schedule:
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 circumstances.
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 initial franchise fee is generally non-refundable. The FDD states that the franchise fee is considered fully earned by Black Bear Diner upon receipt. For the fiscal year ending December 25, 2024, the initial franchise fee ranged from $24,000 to $55,000. This fee compensates Black Bear Diner for training and other pre-opening obligations.
Specifically, the FDD is very clear that the initial franchise fee is non-refundable under any circumstances. This means that once a prospective franchisee pays the fee, it will not be returned, regardless of whether the franchisee ultimately opens a Black Bear Diner restaurant. This is a standard practice in the franchise industry, as the franchisor incurs costs from the moment the agreement is signed.
For franchisees developing multiple Black Bear Diner restaurants under an Area Development Agreement, a Development Fee is required, equal to 50% of the initial Franchise Fee for each restaurant after the first. This Development Fee is also non-refundable, even if the franchisee does not fulfill their development obligations. While the initial franchise fee may vary based on the number of restaurants the franchisee commits to develop, the non-refundable nature of the fee remains consistent.