Under what condition can Black Bear Diner assign and transfer its Franchise Agreement?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
This Development Agreement and all rights hereunder can be assigned and transferred by Franchisor and, if so, shall be binding upon and inure to the benefit of Franchisor's successors and assigns; provided, however, that with respect to any assignment resulting in the subsequent performance by the assignee of the functions of Franchisor, the assignee shall assume the
obligations of Franchisor hereunder and Franchisor shall have no liability for the performance of any obligations contained in this Agreement after the effective date of such transfer or assignment.
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, Black Bear Diner can assign and transfer its Development Agreement and all rights under it. If the assignment results in the assignee performing the functions of Black Bear Diner, the assignee must assume Black Bear Diner's obligations under the agreement. After the effective date of the transfer or assignment, Black Bear Diner will have no liability for the performance of any obligations contained in the agreement.
This means that a prospective Black Bear Diner franchisee should be aware that the franchisor can transfer its rights and obligations to another party. This is a fairly standard clause in franchise agreements, as it allows the franchisor to sell the franchise system or merge with another company.
However, it is important for the franchisee to understand that if the franchisor assigns the agreement, the franchisee will be dealing with a new entity. While the new entity is required to assume the obligations of the franchisor, there is always a risk that the new entity will not be as supportive or effective as the original franchisor. Therefore, a prospective franchisee should carefully consider the implications of this clause before signing a franchise agreement.