For how long after the expiration or termination of the Development Agreement is a Black Bear Diner Developer restricted from operating a similar restaurant?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer covenants that, except as otherwise approved in writing by Franchisor, Developer shall not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for itself, or through, on behalf of or in conjunction with any person, persons, partnership, corporation or limited liability company or other entity: own an interest in, manage, operate, act as a consultant with respect to the management or operation of, or (in the same or a similar capacity as the capacity in which Developer has been engaged in such a business pursuant to this Agreement) engage in any restaurant providing products and services similar to those provided by a Black Bear Diner restaurant within the Development Area or within twenty-five (25) miles from the location of any Black Bear Diner restaurant as of the date of expiration or termination of this Agreement, without Franchisor's written consent. This Section 10.2 shall not apply to ownership by Developer of less than five percent (5%) beneficial interest in the outstanding equity securities of any publicly-held corporation. As used in this Agreement, the term "publicly-held corporation" shall be deemed to refer to a corporation which has securities that have been registered under the federal Securities Exchange Act of 1934.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, a developer is restricted from engaging in a similar restaurant business for a period of two years after the expiration or termination of the Development Agreement. This restriction applies regardless of the reason for termination.
Specifically, the developer cannot own an interest in, manage, operate, or act as a consultant for a restaurant that offers products and services similar to those of Black Bear Diner. This restriction applies within the Development Area or within 25 miles of any Black Bear Diner restaurant as of the termination date. However, this restriction does not apply if the developer owns less than 5% of the equity securities in a publicly-held corporation.
This non-compete clause is a standard practice in franchising to protect the brand and confidential information of Black Bear Diner. It prevents developers from using the knowledge and experience gained during their time with Black Bear Diner to directly compete with the franchise. The clause is designed to protect Black Bear Diner's market share and goodwill.
Black Bear Diner may provide written approval to waive this covenant, but without such approval, the developer must adhere to the restrictions. The FDD also states that the non-compete covenants are independent of other provisions and should be modified to the maximum extent permitted by law if deemed unreasonable. Black Bear Diner is entitled to seek an injunction to prevent any conduct violating this section, as any breach would result in irreparable injury to the company.