Does the related-party receivable between Black Bear Diner and BTH accrue interest?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
the Company. The Company recognized $8,345,526 and $8,041,863 of royalty income from BTH for the years ended December 25, 2024 and December 27, 2023, respectively, which is included in the statements of income.
NOTE 9 - RELATED-PARTY TRANSACTIONS (Continued)
Allocated Administrative Services: The Company also shares certain management and administrative functions with BTH. The Company charged BTH the amount of $3,415,177 and $3,153,562 for allocable share of management and administrative expenses and is rec for the years ended December 25, 2024 and December 27, 2023, respectively, which is included with payroll and benefits expenses in the statements of income.
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 a
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 between Black Bear Diner and Bear Tracks Holdings LLC (BTH) is interest-free. The receivable is unsecured and repayable on demand. This related-party receivable generally includes receivables from royalties and advertising fees, allocations of shared management and administrative functions, gift card receivables from BTH-owned restaurants, and periodic working capital advances to BTH.
As of December 25, 2024, the allocated administrative services receivable within the related-party receivable totaled $254,205, and as of December 27, 2023, it was $241,123. The FDD states that the amounts outstanding at these dates were collected in full after each year-end.
For a prospective Black Bear Diner franchisee, this information is relevant because it shows the financial relationship between the franchisor and its related entities. The fact that the related-party receivable is interest-free suggests that Black Bear Diner is not profiting from these internal transactions through interest charges. The franchisee should be aware of these related-party transactions, as they could potentially impact the financial stability and operations of the franchise system.