What non-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
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; shall jointly and severally guarantee Developer's performance of each and every provision of this Agreement by executing the Guarantee in the form attached to this Agreement as Exhibit C.
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, certain individuals associated with the franchise developer are required to guarantee the developer's performance of the Development Agreement. Specifically, this obligation extends to shareholders, members, partners, general partners, or managing members who hold at least a 25% equity interest in the developer entity. These individuals must execute a guarantee, ensuring the developer adheres to every provision outlined in the Development Agreement.
This guarantee ensures that the developer meets all the requirements of the Development Agreement, such as adhering to the Development Schedule for opening Black Bear Diner restaurants. The developer must enter into a Franchise Agreement for each restaurant and continuously maintain the number of restaurants specified in the Development Schedule. This obligation ensures the developer fulfills their commitment to establishing and operating the agreed-upon number of Black Bear Diner locations.
For a prospective franchisee, this means that if you are a significant equity holder (25% or more) in the entity developing the Black Bear Diner franchises, you will personally guarantee the entity's performance under the Development Agreement. This is a significant commitment, as it holds you personally responsible for the entity's obligations, not just its financial obligations. It is important to carefully review the Development Agreement and understand all the obligations it entails before signing the guarantee.