What is the Black Bear Diner franchisor's obligation regarding consent to a transfer request?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
7. TRANSFERS
7.1 By Franchisor
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.
7.2 By Developer
- 7.2.1 If Developer is a corporation, limited liability company, partnership, or limited liability partnership, each principal of Developer with at least a ten percent (10%) equity ownership interest in Developer ("Principal"), and the interest of each Principal in Developer, is identified in Exhibit C hereto.
Developer represents and warrants that its owners are as set forth on Exhibit C attached to this Agreement, and covenants that it will not permit the identity of such owners, or their respective interests in Developer, to change without complying with this Agreement.
Franchisor shall have the right to designate any person or entity which owns a direct or indirect interest in Developer as a Principal, and Exhibit C shall be so amended automatically upon notice thereof to Developer.
Throughout the term of this Agreement, Franchisor shall have a continuing right to designate as a Principal any person or entity that owns a direct or indirect interest in Developer.
- 7.2.2 This Agreement has been entered into by Franchisor in reliance upon and in consideration of the individual or collective character, reputation, skill, attitude, business ability, and financial capacity of Developer or, if applicable, its Principals who will actively and substantially participate in the development, ownership and operation of the Black Bear Diner restaurants.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Black Bear Diner outlines specific conditions regarding the transfer of the Development Agreement. The franchisor, Black Bear Diner, has the right to transfer the Development Agreement and its associated rights, making it binding on their successors and assigns. However, if the transfer results in the assignee performing the franchisor's functions, the assignee must assume the franchisor's obligations, relieving Black Bear Diner of liability for obligations after the transfer date.
For transfers by the developer (franchisee), if the developer is a corporation, LLC, partnership, or LLP, the principals with at least a 10% equity ownership are identified in Exhibit C of the agreement. The developer must maintain the identity and interests of these owners as stated in Exhibit C and cannot change them without complying with the agreement. Black Bear Diner retains the right to designate any person or entity with a direct or indirect interest in the developer as a principal, automatically amending Exhibit C upon notice to the developer.
Black Bear Diner enters the agreement based on the character, reputation, skills, and financial capacity of the developer or its principals, who will actively participate in the Black Bear Diner restaurants' development, ownership, and operation. This indicates that Black Bear Diner carefully considers the qualifications of those involved in the franchise and any changes to ownership or control must adhere to the outlined procedures.