Under what conditions would I owe Black Bear Diner lost future profits after termination?
Black_Bear_Diner Franchise · 2025 FDDAnswer from 2025 FDD Document
- (e) pay all sums owing to Franchisor which may include, but not be limited to, all damages, costs and expenses, including reasonable attorneys' fees and lost future profits arising from the premature termination of this Agreement for cause due to Franchisee's abandonment or other material default that is not cured in accordance with the requirements of this Agreement;
Source: Item 23 — RECEIPT (FDD pages 56–243)
What This Means (2025 FDD)
According to the 2025 Black Bear Diner Franchise Disclosure Document, a franchisee may be liable for lost future profits if the franchise agreement is prematurely terminated due to specific actions by the franchisee.
Specifically, if the termination occurs 'for cause' because the franchisee either abandons the restaurant or commits another material default that they fail to correct as required by the franchise agreement, Black Bear Diner can seek lost future profits. This means that if a franchisee seriously violates the agreement and does not fix the problem, leading to termination, they could be responsible for compensating Black Bear Diner for the income it expected to receive from that franchise location in the future.
This provision is significant because it highlights the financial risks associated with non-compliance and potential termination. Franchisees should carefully review the franchise agreement to understand what constitutes a 'material default' and what steps are required to 'cure' such a default in order to avoid facing a claim for lost future profits. It is also important to note that the franchisee may also be responsible for other damages, costs, expenses, and attorney's fees associated with the termination.