Are there any exceptions to what is considered a 'Competitive Business' for a Black Bear Diner franchisee?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
- "Competitive Business" means any restaurant business which provides similar food products as those provided by a Black Bear Diner restaurant or whose method of operation or trade dress is similar to that employed in the System; provided, however, that the term "Competitive Business" shall not apply to: (i) any business operated by Franchisee under a Franchise Agreement with Franchisor; or (ii) the ownership for investment purposes of less than five percent (5%) of the stock of any publicly-traded corporation;
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, a 'Competitive Business' is defined as any restaurant that offers similar food products or operates with a similar method or trade dress to the Black Bear Diner system. However, there are specific exceptions to this definition.
The first exception is any business operated by the franchisee under a Franchise Agreement with Black Bear Diner. This means a franchisee can own and operate multiple Black Bear Diner locations without violating the non-compete clause. The second exception involves owning stock in a publicly-traded corporation.
Specifically, the definition of 'Competitive Business' does not apply to the ownership for investment purposes of less than five percent (5%) of the stock of any publicly-traded corporation. This allows a Black Bear Diner franchisee to invest in publicly-traded restaurant companies, even those that might be considered competitive, as long as their ownership stake remains below the 5% threshold and is purely for investment purposes.