Is the related-party receivable between Black Bear Diner and BTH secured or unsecured?
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 the 2025 Black Bear Diner Franchise Disclosure Document, the related-party receivable between Black Bear Diner and Bear Tracks Holdings LLC (BTH) is unsecured. This means that Black Bear Diner does not have a specific claim on any of BTH's assets as collateral for the receivable.
The related-party receivable is also interest-free and repayable on demand. The receivable generally consists of a combination of items, such as receivables from royalty and advertising fees, receivables from the allocation of shared management and administrative functions, gift card receivables from sales of gift cards at BTH-owned restaurants, and periodic working capital advances that Black Bear Diner may make to BTH.
For example, as of December 25, 2024, the allocated administrative services receivable included within the related-party receivable totaled $254,205. All outstanding amounts as of December 25, 2024, and December 27, 2023, were collected in full after each respective year-end. The fact that the receivable is unsecured means Black Bear Diner is at a higher risk of potential loss if BTH were unable to pay. However, the fact that it is repayable on demand and has historically been collected in full mitigates this risk to some extent.