How are royalties calculated for a Black Bear Diner franchise?

According to the 2025 Franchise Disclosure Document, Black Bear Diner calculates royalties as 4.5% of gross sales. Gross sales are defined as the total sales price of all food products, including take-out, drive-thru, or catering, and all other products and services sold by the Black Bear Diner Restaurants, net of discounts and excluding taxes collected directly from customers and paid to taxing authorities.

For a prospective franchisee, this means that for every dollar of eligible sales generated by the Black Bear Diner restaurant, 4.5 cents must be paid to the franchisor as a royalty. This ongoing royalty payment is a standard practice in franchising and compensates the franchisor for the use of their brand, systems, and ongoing support.

It is important to note that the 4-Wall EBITDA figures presented in Item 19 do not account for royalties, advertising contributions, or minimum local advertising expenditures. Therefore, a franchisee needs to factor in these additional expenses when evaluating the potential profitability of a Black Bear Diner franchise. The FDD includes a second chart of estimated amounts that a franchisee would incur for royalties (4.5% of Gross Sales), advertising contributions (1% of Gross Sales) and minimum local advertising expenditures (1% of Gross Sales) under the Franchise Agreement.