Can Black Bear Diner franchisees be required to sign contracts with third-party suppliers?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
, and materials. You must purchase all goods and services required for the operation of your Black Bear Diner Restaurant from an approved supplier (which may be only one supplier for any given good or service) under the terms and in the manner we designate. If we or our affiliates designate that such goods and/or services are to be purchased through approved third party suppliers, then you must purchase such goods and/or services from such suppliers according to the terms and in the manner which we approve. We may designate only one exclusive supplier for any product and/or service.
If we designate one or more exclusive suppliers for a particular good or service, you may not request to utilize an alternative supplier. However, if an exclusive supplier has not been designated and you desire to use any item, service or supplier in operating the Franchised Restaurant that we have not approved (for items or services that must meet our specifications or require supplier approval), you will first send us sufficient information, specifications and/or samples for us to determine whether the item or service complies with our standards and specifications or the supplier meets our criteria. We may charge a reasonable fee for inspection and/or testing, not to exceed $1,000, and will decide within a reasonable time, typically 30 days, after receiving all requested information whether any proposed item or service meets our specifications or if you may purchase or lease items or services from a proposed supplier. We apply the following general criteria in approving a proposed supplier: ability to provide sufficient quantity of product; quality of products and/or services at competitive prices; production and delivery capability; dependability and general reputation of the supplier and willingness to pay us a fee to join our key vendor network. In addition, suppliers of food products must meet our standards for testing and auditing to assure quality, safety and nutrition. We will notify you in writing of our decision regarding the approval or disapproval of any supplier or item or service. In addition, we will notify you in writing of our revocation of approval of any supplier, or of any item or service no longer meeting our specifications. You may be required to sign contracts with third party suppliers in the form they specify.
Fountain Beverages. We currently maintain purchasing and pricing arrangements for the supply of fountain and packaged beverages including soft drinks, teas, waters, isotonics, energy drinks, juices, juice drinks, dairy-based and coffee-based beverages. Pepsi and Dr. Pepper are the only approved beverage lines for your Franchised Restaurant. You must feature and exclusively purchase your requirements of beverage products from full-line suppliers of Pepsi and Dr. Pepper
products. Certain funds will be paid by beverage suppliers directly to qualifying franchisees and others to us. These funds may be designated for general and in-store advertising, system-wide promotions and/ or franchise conventions.
Merchant and Gift Cards. We require all franchisees to accept major credit cards for customer purchases. You may be required to invest in additional equipment and incur fees from the credit card vendors that we designate. We also have an electronic gift card program and you must participate in this program. As part of the gift card program you and other franchisees will issue stored value cards to customers for use as gift certificates, promotional cards and restaurant credit. When a gift card is redeemed we will pay the redeeming franchisee the amount of the purchase from a central gift card fund that we maintain.
Digital Jukebox Lease & Music Royalty Licenses. We have a sole supplier for the installation and maintenance of the digital jukebox you will use in your Franchised Restaurant. You will lease your digital jukebox and procure the appropriate music rights licenses from our supplier. Our supplier currently leases the jukebox and music to you at $350 a month, but the amount is subject to change at the supplier's discretion. In order to install the jukebox, you must provide a suitable prewired location within your Franchised Restaurant. In addition, you will need to maintain DSL and phone lines in order to download music and for its ongoing operation.
Computer System. You are required to purchase and utilize a computer system including digital kitchen display system, point-of-sale system, including hardware and software, as more fully described in Item 11. You will purchase the Computer System and enter into license agreements for software with approved supplier(s). Under the terms of certain license agreements we have negotiated with third party suppliers of software used in the operation of the Computer System, you are required to pay the monthly licensing fee directly to us for your use of the software. We then remit your and other franchisees' license fees to the software licensor. During our most recent fiscal year ended December 25, 2024, we collected license fees from franchisees totaling $467,624 for software licenses. Because we serve only as a conduit for these payments they do not appear as revenue on our financial statements. As noted in Item 6, you must use an approved online ordering and delivery service that integrates with the
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–26)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, franchisees may be required to sign contracts with third-party suppliers. Black Bear Diner retains the right to approve or designate the suppliers, contractors, manufacturers, vendors, distributors, producers, terms, and distribution methods for goods and services. Franchisees must purchase goods and services required for the operation of their Black Bear Diner restaurant from an approved supplier, potentially a single exclusive supplier, under the terms designated by Black Bear Diner.
If Black Bear Diner designates that goods and/or services are to be purchased through approved third-party suppliers, franchisees must purchase such goods and/or services from those suppliers according to the terms and in the manner approved by Black Bear Diner. If an exclusive supplier has not been designated and a franchisee desires to use an unapproved item, service, or supplier, they must submit sufficient information, specifications, and/or samples to Black Bear Diner for approval. Black Bear Diner may charge a reasonable fee for inspection and/or testing, not to exceed $1,000, and will decide within a reasonable time, typically 30 days, after receiving all requested information whether any proposed item or service meets their specifications or if you may purchase or lease items or services from a proposed supplier.
Black Bear Diner outlines general criteria for approving a proposed supplier, including the ability to provide sufficient quantity of product, quality of products and/or services at competitive prices, production and delivery capability, dependability and general reputation of the supplier, and willingness to pay a fee to join their key vendor network. Suppliers of food products must also meet Black Bear Diner's standards for testing and auditing to assure quality, safety, and nutrition. The FDD also specifies that Pepsi and Dr. Pepper are the only approved beverage lines, and franchisees must exclusively purchase their beverage product requirements from full-line suppliers of Pepsi and Dr. Pepper products.
Furthermore, Black Bear Diner requires all franchisees to accept major credit cards and participate in an electronic gift card program, potentially requiring investment in additional equipment and incurring fees from designated credit card vendors. Franchisees are also required to lease a digital jukebox from a sole supplier at a rate of $350 a month, subject to change, and maintain DSL and phone lines for its operation. Franchisees must purchase and utilize a computer system, including hardware and software, from approved suppliers and may be required to pay monthly licensing fees directly to Black Bear Diner for software use, which Black Bear Diner then remits to the software licensor.