What does the related-party receivable include for Black Bear Diner?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
covers all eligible employees, except executive management of the Company, who have attained age 21 and have completed one year of eligible service. Contributions to the Plan include (1) the amount of salary reduction elections of all participants, (2) employer-matching contributions equal to 50% of the matched employee contributions, not to exceed 6% of employer profit sharing amount. All contributions are limited to the maximum amount allowed for federal income tax purposes. For the years ended December 25, 2024 and December 27, 2023, there were approximately $47,448 and $41,400, respectively, of contributions to the Plan.
NOTE 9 - RELATED-PARTY TRANSACTIONS
Related Party Royalties: The Company is under common control with BTH, as both are subsidiaries of BBD Opco LLC. The Company collects royalty revenue from Black Bear Diner restaurants owned and operated by BTH under a trademark license agreement that requires BTH to pay a 4.50% royalty to the Company.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, the company has related-party transactions with Bear Tracks Holdings LLC (BTH), an entity under common control, as both are subsidiaries of BBD Opco LLC. Black Bear Diner collects royalty revenue from Black Bear Diner restaurants owned and operated by BTH under a trademark license agreement, where BTH pays a 4.50% royalty to the company. The royalty income recognized from BTH amounted to $8,345,526 for the year ended December 25, 2024, and $8,041,863 for the year ended December 27, 2023, and is included in the statements of income.
Additionally, Black Bear Diner shares certain management and administrative functions with BTH. The company charges BTH for its allocable share of management and administrative expenses. These charges amounted to $3,415,177 for the year ended December 25, 2024, and $3,153,562 for the year ended December 27, 2023, and are included with payroll and benefits expenses in the statements of income. These related-party transactions provide insight into the financial relationships between Black Bear Diner and its affiliated entities.
For a prospective franchisee, understanding these related-party transactions is crucial for assessing the financial health and stability of Black Bear Diner. It's important to recognize that a significant portion of the company's revenue and expense allocations are tied to transactions with affiliated entities. While such arrangements are not inherently problematic, franchisees should carefully evaluate whether these transactions are conducted at arm's length and on terms that are fair to all parties involved. Further due diligence and consultation with financial advisors are recommended to fully understand the implications of these related-party transactions.