In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Black Bear Diner franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Black Bear Diner franchise, based on Item 7 of the company’s 2018 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Black Bear Diner franchise, based on Items 5 and 6 of the company’s 2018 FDD

• Section IV – Number of franchised and company-owned Black Bear Diner outlets at the start of the year and the end of the year for 2015, 2016, and 2017, based on Item 20 of the company’s 2018 FDD

• Section V – Presentation and analysis of Black Bear Diner’s financial performance representations, based on Item 19 of the company’s 2018 FDD, including information on the:

• 2017 average, median, high, and low gross sales for the 58 franchised Black Bear Diner restaurants in operation for one year or longer and provided the franchisor with the necessary data as of the effective date of the 2018 Franchise Disclosure Document

Section I – Background Information

18 Things You Need to Know About the Black Bear Diner Franchise

Announces Major Expansion

1.  In early April 2018, Black Bear Diner announced that it would be opening 12 new restaurants in California, Missouri, Oklahoma, and Texas. The announcement came only shortly after Black Bear Diner’s entrance into Oklahoma and Texas earlier this year, and marks the brand’s first restaurants in Missouri.

2.  Bruce Dean, co-founder and CEO of Black Bear Diner, said, “Our entrances into Oklahoma and Texas couldn’t have been more successful, and we are so grateful for the warm welcomes we have received in both states. We love bringing our home-styled comfort classics to new and regular guests alike, and more importantly, becoming a true partner to our local communities. We look forward to bringing the Black Bear Diner style of hospitality and food to more guests as we continue to execute our growth plan.”

3.  Details of the new units are as follows:

• California: Black Bear Diner has signed a multi-unit franchise agreement to open six restaurants around the Inland Empire area over the next six years, working with a highly experienced, multi-brand operator.
• Missouri: Black Bear Diner has signed an area development agreement to introduce the brand to Missouri, beginning in St. Louis and St. Charles counties. The agreement calls for three new units to be opened over the next three years, with the first location to be opened this year.
• Oklahoma: Black Bear Diner opened two new company units in Oklahoma — in Tulsa and Quail Springs. The Quail Springs restaurant is located at 3015 W. Memorial Road and opened in April, while the Tulsa restaurant is located at 9026 E. 71st St. and opened in August.
• Texas: Located at 9510 FM 1960 Bypass in Humble, this company-owned unit is Black Bear Diner’s second location in Texas. The restaurant opened over the summer.

Launches Community Investment Program

4.  At the beginning of July 2018, Black Bear Diner announced a new philanthropic program to improve local coffee-growing communities in Nicaragua. In partnership with Java City Coffee Roasters and the Global Aldea Foundation, “Bears Brew Back” is an ongoing, long-term commitment to improve the lives of the Nicaraguan people who grow the coffee used by Black Bear Diner.

5.  As part of the partnership, all Black Bear Diner locations now serve single-source, 100% Nicaraguan coffee. Additionally, consumers can support the program by purchasing the coffee by the pound online at the Black Bear Diner website.

6.  Bruce Dean, co-founder and CEO of Black Bear Diner, said, “We are honored to launch Bears Brew Back to not only serve one of the finest cups of coffee to our guests, but to also give back to the people of Nicaragua who work so hard to grow the delicious coffee beans our guests enjoy every day. While providing high quality food and beverages to our guests is extremely important to us, we are also passionate about helping others and are grateful to be able to supply basic essentials such as clean water and medical care to these hardworking family farms.”

7.  Black Bear Diner worked with Global Aldea Coffee Cooperative’s non-profit arm, Global Aldea Foundation, to create the Bears Brew Back program by identifying humanitarian projects within specific Nicaraguan farming communities. Bears Brew Back’s first initiative was a water pump and piping improvement project in the remote Nicaraguan village of Mancotal, where much of Black Bear Diner’s coffee is grown. The investments will provide clean, running water in homes and much better access to water for the entire community.

8.  Additionally, Bears Brew Back is funding a medical van to visit the community to provide routine medical care that is currently not available. A video highlighting the project and the local communities it benefits can be found here.

Signs Multi-Unit Development Agreement for 19 Locations

9.  To kick off 2018, Black Bear Diner announced that it had signed a multi-unit development agreement with its existing franchise partners Karan Gogri and Sanjiv Patel of National Restaurant Inc. This new agreement will bring an additional 19 units over a six-year period to both new and existing markets. Gogri and his family currently own two Black Bear Diner locations in the San Francisco Bay Area.

10.  The agreement will bring new Black Bear Diner locations to the San Diego and Marin areas of California, as well as expand upon the brand’s entrance into Texas (the first Texas location opened in early March). The team will bring the brand to Austin and San Antonio, Texas for the first time, executing on the brand’s vision to expand eastward over the next several years.

11.  Bruce Dean, co-founder and CEO of Black Bear Diner, said, “Karan and Sanjiv have been very strong partners to Black Bear Diner and their commitment, enthusiasm and proven ability to execute make them exceptional partners to grow the brand in these new and existing markets. As we execute upon our plans to expand eastward, we will continue to seek out well qualified, committed multi-unit franchise partners who share our core beliefs and values.”

12.  Gogri and his college classmates will be instrumental in driving the day-to-day operations under this new development agreement. In 2018, the group is planning to open one location in Marin county and two in San Diego, California.

13.  Gogri added, “As the son of restaurant franchise owners, I have grown up in this industry and have long valued the opportunities that come from identifying the right brand to partner with. Sanjiv and I have found this in Black Bear Diner, a brand that serves up exceptional food and strong values, and as a result has provided tremendous opportunity for us, along with several of our classmates from U.C. Santa Barbara who are now devoting their professional lives to growing this great brand as a part of our franchise group.”

Company History

14.  The first Black Bear Diner was opened in 1995 in Mount Shasta, California by Bruce Dean and Bob and Laurie Manley. Dean and the Manleys wanted to open a restaurant that served homestyle comfort foods. They named the new restaurant Black Bear Diner after Bob Manley’s previous business venture, the Black Bear Gallery, where he was co-owner, an educator, and wilderness guide.

15.  The business partners decided to really lean into a rustic motif with “over-the-top bear paraphernalia.” Each Black Bear Diner location is decorated with a 12-foot tall black bear sculpture by Ray Schulz, and murals and artwork created for each restaurant by Steve and Gary Fitzgerald and Colleen Mitchell-Veyna.

16.  While Bob Manley, who is currently on the board of directors, helped develop Black Bear Diner’s atmosphere and environment, Dean brought decades of restaurant industry experience to run the business side of things. Dean still serves as the CEO of Black Bear Diner and he is credited with developing the franchising system and the brand’s menu. He is also responsible for Black Bear Diner’s strategic expansion. Additionally, Dean created some of the recipes for Black Bear Diner’s signature items and came up with the idea to do “bear-sized” portions.

17.  Black Bear Diner started franchising in 2002 and today it has restaurants across the United States.

Entrepreneur’s Franchise 500

18.  Black Bear Diner ranked No. 211 on Entrepreneur’s 2018 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Black Bear Diner franchise costs, based on Item 7 of the company’s 2018 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Black Bear Diner’s initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2018 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2015

• Outlets at the Start of the Year:  49
• Outlets at the End of the Year:  55
• Net Change:  +6

2016

• Outlets at the Start of the Year:  55
• Outlets at the End of the Year:  59
• Net Change:  +4

2017

• Outlets at the Start of the Year:  59
• Outlets at the End of the Year:  68
• Net Change:  +9

Company-Owned

2015

• Outlets at the Start of the Year:  18
• Outlets at the End of the Year:  19
• Net Change:  +1

2016

• Outlets at the Start of the Year:  19
• Outlets at the End of the Year:  27
• Net Change:  +8

2017

• Outlets at the Start of the Year:  27
• Outlets at the End of the Year:  38
• Net Change:  +11

Section V – Financial Performance Representations (Item 19, 2018 FDD) and Analysis

• This Item contains Gross Sales information about franchisee-owned Black Bear Diner restaurants for the year ended December 31, 2017.

• In determining Gross Sales, the franchisor does not include sales tax collected from customers, discounts deducted from the prices charged, and/or amounts reported for employees’ meals.

• The franchisor has only included franchisee-owned Black Bear Diner restaurants in operation for one year or longer that have provided it with the necessary data as of the effective date of the 2018 Franchise Disclosure Document, in providing these calculations.

• The information has not been audited or reviewed by an independent certified public accountant; it is derived from unaudited financial reports submitted by franchisees as part of the franchisor’s reporting requirements.

• The information is based on reports received from 58 Black Bear Diner restaurants. For the year ended December 31, 2017, there were 68 franchisee-owned Black Bear Diner restaurants in operation.

• These numbers can vary considerably due to a variety of factors, such as:  location, local popularity and consumer tastes in general, physical layout, competition from other similar and dissimilar restaurants, management capabilities, and local market conditions.

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