Does the related-party receivable for Black Bear Diner accrue interest?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPT]
Related-Party Receivable: The related-party receivable is unsecured, interest free and repayable on demand. The related-party receivable at any point in time generally consists of any combination of receivables from royalty and advertising fees, receivables from allocation of shared management and administrative functions for which the Company bills and is reimbursed, gift card receivables from sales of gift cards at BTH owned restaurants for which cash has not yet been remitted to the Company, and from time to time, certain periodic working capital advances that the Company may make to entities under common control (BTH). As of December 25, 2024 and December 27, 2023, allocated administrative services receivable included within the related-party receivable totaled $254,205 and $241,123, respectively. Amounts outstanding at December 25, 2024 and December 27, 2023 were collected in full subsequent to each respective year end.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to Black Bear Diner's 2025 Franchise Disclosure Document, the related-party receivable is interest-free. The document specifies that the receivable is unsecured and repayable on demand. This related-party receivable generally includes receivables from royalty and advertising fees, allocations of shared management and administrative functions, gift card receivables from BTH-owned restaurants, and periodic working capital advances to entities under common control (BTH).
As of December 25, 2024, allocated administrative services receivable included within the related-party receivable totaled $254,205, while on December 27, 2023, it was $241,123. The FDD states that the amounts outstanding at these dates were collected in full after each respective year-end.
For a prospective franchisee, this indicates that Black Bear Diner engages in financial transactions with related entities, but these transactions do not generate interest income for the company. This arrangement could be seen as a benefit to the related parties, as they are not charged interest on these receivables. However, it also means that Black Bear Diner is not earning additional income from these transactions, which could potentially impact its overall financial performance.