What monetary obligations are covered by the Guarantee and Assumption of Obligations for a Black Bear Diner franchise?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
04,821 | 323,467 | | | Office equipment | 482,468 | 384,135 | | | 1,048,790 | 869,103 | | | | Less accumulated depreciation | (472,944) | (354,481) | |
3.2 Other Fees
For each Franchise Agreement to be executed under the terms of the Development Agreement, Developer, as Franchisee, will be obligated to pay Royalty fees and Marketing Fund Contributions at the percentage rate as provided in the then-current Franchise Agreement for each Franchised Restaurant.
3.3 Guarantee of Performance
Each present and future: (i) shareholder of a Developer that is a corporation with at least a twenty-five percent (25%) equity interest in Developer; (ii) member of a Developer that is a limited liability company with at least a twenty-five percent (25%) equity interest in Developer; (iii) partner of a Developer that is a partnership with at least a twenty-five percent (25%) equity interest in
Developer; (iv) partner of a Developer that is a limited liability partnership with at least a twentyfive percent (25%) equity interest in Developer; (v) general partner of Developer that is a limited partnership; (vi) or managing member of a Developer that is a limited liability company;
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISED RESTAURANT (FDD page 40)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner FDD, the Guarantee ensures that certain individuals or entities associated with the Developer (franchisee) will uphold the financial and operational responsibilities outlined in the Development Agreement. Specifically, this guarantee applies to shareholders, members, partners, or managing members who hold at least a 25% equity interest in the Developer entity.
The guarantee mandates that these individuals or entities are jointly and severally responsible for the Developer's adherence to every provision within the Development Agreement. This includes, but is not limited to, the obligation to pay Royalty fees and Marketing Fund Contributions as specified in the then-current Franchise Agreement for each Black Bear Diner restaurant. This ensures Black Bear Diner that there are individuals with significant financial stakes who are committed to fulfilling the financial obligations of the franchise.
In practical terms, this means that if the Developer (the franchisee entity) fails to meet its financial obligations, Black Bear Diner can seek recourse not only from the business entity itself but also from the individuals who have guaranteed the performance. This provides an added layer of security for Black Bear Diner, reducing the risk of financial loss due to franchisee default. The guarantee is documented in a specific form (Exhibit C) attached to the Development Agreement, ensuring that the terms and conditions are clearly defined and legally binding.