Do you want to open a restaurant business by buying Black Bear Diner franchise? If YES, here is how much it cost to open Black Bear Diner franchise successfully. If you are looking towards opening a Black Bear Diner Franchise, it will be nice for you to have a preview of what the company represents before going ahead to enquire about the total cost of opening the franchise in your location.
Black Bear Diner was founded in 1995 and they began franchising in 2002, about 18 years ago. The current CEO is Bruce Dean and they have their corporate head office at 1880 Shasta St. Redding, CA 96001, USA. Black Bear Diner also provides franchise opportunities and as of the 2022 Franchise Disclosure Document, there are 83 franchised Black Bear Diner locations in the USA.
Based on 2022 FDD data, Black Bear Diner has franchise locations in 10 states. The largest region is the West with 82 franchise locations. Black Bear Diner is a restaurant chain in the Western United States that serves top quality, old-fashioned diner food at affordable prices.
Black Bear Diner’s menu, printed to look like an old-fashioned newspaper, is extensive, featuring breakfast, lunch, dinner, dessert, and kids’ selections. Food includes typical diner fare like eggs, bacon, burgers, sandwiches, and a variety of pies, which are made fresh and on location. Black Bear Diner is committed to customer service and maintaining a fun, yet professional dining environment.
Furthermore, Black Bear Diner aims for a rustic atmosphere with its décor, as well as an overwhelming number of bear statues, paintings, and replicas. In fact, each restaurant has a 12-foot black bear carving to greet its customers. Here are areas where you are expected to spend money and the cost associated with it;
Financial Investment Required to Open a Black Bear Diner Franchise
1. Initial Investment Range: $1,114,800 to $1,876,200.
2. Initial Franchise Fee: $24,000 to $55,000
Please note that you must pay an initial Franchise Fee based on the number of existing Black Bear Diner restaurants you currently operate according to the following schedule when you sign the Franchise Agreement.
- Number of Franchised Restaurants: 1-2 Restaurants
- Franchise Fee: $55,000
- Number of Franchised Restaurants: 3 Restaurants
- Franchise Fee: $50,000
- Number of Franchised Restaurants: 4-7 Restaurants
- Franchise Fee: $32,000
- Number of Franchised Restaurants: 8+ Restaurants
- Franchise Fee: $24,000
The Franchise Fee is paid to Black Bear Diner in a lump sum at the time of signing the Franchise Agreement and is deemed to be fully earned upon receipt and is non-refundable. Please note that the Franchise Fee is uniform for all franchisees except if you develop multiple Franchised Restaurants under an Area Development Agreement described below.
For Black Bear Diner’s most recent fiscal year, the initial Franchise Fee ranged from $24,000 to $55,000. Black Bear Diner will refund all but $10,000 of the initial Franchise Fee if it determines that you are unable to complete the training program described in Item 11 to its satisfaction and it elects to terminate the Franchise Agreement.
The Franchise Fee is used to compensate Black Bear Diner for expenses and costs in granting the franchise and is non-refundable under any other circumstances.
3. Development Fee: 50 percent of the initial Franchise Fee
For each of the Franchised Restaurants you agree to develop after the first one
Under the Area Development Agreement, you are required to execute one Franchise Agreement and pay the Franchise Fee for the first Franchised Restaurant simultaneously with the execution of the Area Development Agreement.
Please note that under the terms of the Area Development Agreement, the Franchise Fee for each Franchised Restaurant is based on the number of Black Bear Diner restaurants you agree to develop according to the following schedule.
- Number of Franchised Restaurants to be Developed – 1
- Franchise Fee: $55,000
- Development Fee: $0
- Number of Franchised Restaurants to be Developed – 2
- Franchise Fee: $45,000
- Development Fee: $22,500
- Number of Franchised Restaurants to be Developed – 3
- Franchise Fee: $40,000
- Development Fee: $20,000
- Number of Franchised Restaurants to be Developed – 4-7
- Franchise Fee: $32,000
- Development Fee: $16,000
- Number of Franchised Restaurants to be Developed – 8+
- Franchise Fee: $24,000
- Development Fee: $12,000
You must pay a Development Fee equal to 50 percent of the initial Franchise Fee for each of the Franchised Restaurants you agree to develop after the first one. Black Bear Diner and you will agree on the number of Franchised Restaurants to be developed before you sign the Development Agreement.
In addition, the Development Agreement will contain a minimum “Development Schedule” which will specify when each of the Franchised Restaurants must be operational. For example, if you agree to develop 5 Franchised Restaurants within a specified Development Territory, you will sign a single Franchise Agreement and pay an initial Franchise Fee of $55,000 for the first Franchised Restaurant and sign a Development Agreement for the remaining 4 Franchised Restaurants.
The Development Fee will be equal to 50 percent of the Franchise Fee for each Franchised Restaurant to be developed and as a result, the total amount of the Development Fee would be $74,500 ($22,500 + $20,000 + $16,000 + $16,000) for the four Franchised Restaurants to be developed.
When you execute a Franchise Agreement for the second and each subsequent Franchised Restaurant, you will pay the Franchise Fee as stated in the chart above; however, you will receive a credit in the amount of the Development Fee you paid per Franchised Restaurant under the Development Agreement.
As a result, your balance due at the time you execute each Franchise Agreement will be 50 percent of the Franchise Fee. The Development Fee is fully earned by Black Bear Diner when paid, even if you do not fulfill your obligations under that agreement, and is not refundable under any circumstances.
4. Royalty: 4.5 percent of Gross Sales
And the Due Date for this fee is Weekly. Amounts due will be withdrawn by electronic funds transfer (“EFT”) or other methods Black Bear Diner periodically specifies.
“Gross Sales” means the total amount of all revenues that you receive from the sale of all menu items, Gift Shop Products, banquet and catering services, and from goods and services from all sources in any way connected with the Franchised Restaurant whether for check, cash, credit, or otherwise, including, without limitation, all proceeds from any business interruption insurance, less sales tax collected from customers and paid to the appropriate taxing authorities.
- Marketing Fund Contribution: 1.5 percent of Gross Sales and the Due Date for this fee is Weekly.
Please note that Black Bear Diner has the right to increase this amount to 2 percent upon 30 days’ notice to you.
- Local Advertising: 1.5 percent of Gross Sales and the Due Date for this fee is Monthly.
Please note that you pay directly, subject to Black Bear Diner’s approval. Payable to suppliers of advertising services.
Within 30 days after the end of each month, you must provide Black Bear Diner with an accounting of your expenditures in a form prescribed by it.
- Grand Opening Advertising: $5,500 and the Due Date for this fee is Between 1 week prior to opening and 8 weeks after opening.
Please note that you must perform a grand opening of your Franchised Restaurant at time of beginning operations or if you relocate.
You pay directly subject to Black Bear Diner’s approval. Payable to suppliers of advertising.
- Renewal Fee: $5,000 and the Due Date for this fee is Upon signing renewal documents.
Please note that this fee is Payable if you and Black Bear Diner elect to renew and enter into a Renewal Franchise Agreement.
- Audit Expenses: Cost of audit, plus interest and the Due Date for this fee is As invoiced.
Please note that this fee is Payable only if the audit shows an understatement in amounts due of at least 3 percent.
- Late Payment Interest: 18 percent of the overdue amount, calculated daily, or the maximum rate permitted by law, whichever is less and the Due Date for this fee is After due date.
Please note that this fee Applies to all Royalty Fees, Advertising Fund Contributions, and amounts due for purchases from Black Bear Diner or its affiliate.
- Bear Country Store Product Purchases: This fee will vary under circumstances and the Due Date is As required.
Please note that you must purchase these products from Black Bear Diner’s approved or designated suppliers in order to meet anticipated customer demand.
- Merchant and Gift Card Processing Fees: Approximately $75 per month, plus transaction fee ranging from approximately 4.7 percent to 6 percent and the Due Date for this fee is Monthly.
Please note that this fee is imposed by Black Bear Diner but payable to an approved third-party supplier of processing services.
- Waitlist Management System: Approximately $35 to $45 per month and the Due Date for this fee is Monthly.
Please note that this fee is imposed by Black Bear Diner but payable to an approved third-party supplier of waitlist and queue management services.
- Olo Online Digital Ordering System: Approximately $50 per month for basic service, plus monthly fee depending on order quantity package ranging from $5 for 10 monthly orders to $90 for 700 monthly orders. In addition, commission payable to approved delivery service providers typically ranges from approximately 20 to 30 percent of cost of order.
The Due Date for this fee is Monthly.
Please note that Black Bear Diner requires you to use an approved online ordering platform, currently Olo, and an approved delivery service. Costs vary depending on the service selected and your anticipated monthly online orders. Payable directly to service providers.
- Software License Fees: Approximately $200 to $400 depending on the modules you select and the Due Date for this fee is Monthly.
Please note that you are required to license and use software including Ctuit, Aloha, Connected Payments, and Playerlync software in the operation of your Restaurant. The license fees are payable to Black Bear Diner, who remits it to the software licensor.
- Suppliers’ Approval: Reasonable cost of evaluation and actual cost of test, not to exceed $1,000 and the Due Date for this fee is time of inspection.
Please note that this fee Applies to costs in connection with evaluating a supplier or testing a product at your request.
- Reimbursement of Amounts Paid on Your Behalf: Black Bear Diner’s costs and the Due Date for this fee is Within 15 days after billing.
Please note that this is Payable only if you are required to reimburse Black Bear Diner for amounts paid on your behalf.
- Transfer Fee: $10,000 and the Due Date for this fee is Before transfer.
Please note that this transfer fee does not apply to a transfer to an entity you own or control.
- Ongoing Training: You are required to pay your expenses as well as your employees’ expenses in attending training and the Due Date for this fee is Prior to training.
Please note that attendance will not be required more than 2 times per year and will not last more than 2 days per session.
- Substitute General Manager Training: $3,000 and the Due Date for this fee is At time of scheduling.
Please note that if you hire a substitute General Manager, they must attend and satisfactorily complete the Initial Training Program.
- Food Safety and Sanitation Inspections: Black Bear Diner’s expenses in connection with each inspection of your Franchised Restaurant, which are currently approximately $300 per inspection and the Due Date for this fee is Upon demand.
Please note that Black Bear Diner uses a third party to perform food safety and sanitation inspections. Currently, there are three inspections per year. You must reimburse Black Bear Diner for the costs of the inspections and any follow-up inspections resulting from a failed inspection.
- Reschedule of Scheduled Opening Date: Black Bear Diner’s actual costs of rescheduling, which are estimated to range from $4,500 to $8,000 and the Due Date for this fee is At time of rescheduling.
Please note that if your opening is rescheduled, you will pay all costs associated with rescheduling the team providing opening guidance and assistance, including airfare, lodging, and related travel charges.
- Failure to Attend Franchisee Convention: $2,500 and the Due Date for this fee is Same as Royalty Fee.
Please note that you are only required to pay this fee if you or your General Manager (or approved substitute) does not attend the Franchisee Convention.
- Failure to Attend General Manager Annual Training Meeting: $1,500 and the Due Date for this fee is Same as Royalty Fee.
Please note that you are only required to pay this fee if your managerial employees do not attend the General Manager Annual Training Meeting.
- Cost and Attorneys’ Fees: This fee will vary under circumstances and the Due Date for this fee is as incurred.
Please note that you will reimburse Black Bear Diner for all costs if you fail to comply with the Franchise Agreement or any other agreement.
- Indemnification: This fee will vary under circumstances and the Due Date for this fee is as incurred.
Please note that you defend suits at your cost and hold Black Bear Diner harmless against suits involving damages resulting from your operation of the Franchised Restaurant.
- Veteran Incentives: This is open for negotiation with the franchisor
- Term of Agreement and Renewal: The length of the initial franchise term is 10 years. If requirements are met, franchisees can renew for one additional term of 10 years.
- Financial Assistance: Black Bear Diner offers in-house financing to cover the only franchise fee and Black Bear Diner also has relationships with third-party sources which offer financing to cover the following: startup costs, and equipment et al.
In Summary,
- Initial Investment: $1,114,800 – $1,876,200
- Ongoing Initial Franchise Fee $55,000
- Total Investment: $1,133,800 to $2,114,200
- Working Capital: $100,000 to $150,000
- Ongoing Royalty Fee 4.5 percent
- Ad Royalty Fee 1 percent