What happens if Black Bear Diner terminates a Franchise Agreement for cause?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in the Area Development Agreement | Summary | |
|---|---|---|---|
| h. | "Cause" defined (defaults which cannot be cured) | Section 8.1 and 9.1 | Non-curable defaults include: bankruptcy related events, any unapproved transfers, any material misrepresentations in the application for the Development Agreement; conviction of a felony; any unauthorized use of our Marks or Confidential Information; termination of a Franchise Agreement by us for cause or by you without cause; your failure to meet the development obligations. We can terminate the Development Agreement if we have delivered a notice of termination of a Franchise Agreement in accordance with its terms and conditions or you have terminated a Franchise Agreement without cause. |
| i. | Your obligation on termination/ non renewal | Section 9 | You have no further right to develop or operate any additional Franchised Restaurants; you may continue to own and operate all Franchised Restaurants under any existing Franchise Agreements; you must pay all amounts owed to us. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 41–46)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the consequences of the brand terminating an Area Development Agreement for cause are outlined in Section 8.1 and 9.1. Specifically, if Black Bear Diner terminates a Franchise Agreement for cause, or if the franchisee terminates without cause, it constitutes a non-curable default under the Area Development Agreement.
Upon such termination, the franchisee loses the right to develop or operate any additional Black Bear Diner restaurants beyond those already under existing Franchise Agreements. However, the franchisee can continue to own and operate restaurants under existing agreements, provided all outstanding amounts owed to Black Bear Diner are paid.
This provision is significant for prospective area developers as it links the fate of the Area Development Agreement to the performance and termination of individual Franchise Agreements. A termination for cause on one franchise unit can trigger broader consequences, limiting the developer's expansion rights within the designated area. This highlights the importance of maintaining compliance and avoiding defaults that could lead to termination of any individual franchise.