Black Bear Diner Franchise Costs $1.5M – $2.1M (+ 2024 Profits)

Black Bear Diner was founded in 1995 by Bruce Dean and Bob Manley in Mount Shasta, California. The founders aimed to create a diner that would serve as a community hub, offering home-cooked meals in a welcoming atmosphere, which led to the adoption of the distinctive black bear theme​​.

The franchise, headquartered in Redding, California, began its franchising journey in 2002, expanding its footprint beyond its original location. As of 2023, Black Bear Diner has grown to 156 locations across 14 states, indicating a consistent growth trajectory over the years​​.

Black Bear Diner differentiates itself in the competitive dining industry through its unique thematic decor, generous portion sizes, and a menu that emphasizes home-style, comfort food.

Type of Expenditure	Amount
Franchise Fee	$24,000 – $55,000
First Month’s Rent	$9,000 – $20,000
Security Deposits	$7,500 – $23,000
Leasehold Improvements	$666,800 – $800,000
Furniture, Fixtures & Equipment	$70,000 – $84,000
Kitchen Equipment	$382,935 – $466,240
Décor Package	$30,100 – $53,455
Carved Bear Package	$33,100 – $48,300
Initial Inventory – Food & Paper	$14,000 – $20,000
Initial Inventory – Gift Shop Products	$2,000 – $5,000
Insurance	$7,000 – $20,000
Signage	$33,900 – $54,815
Office Equipment and Supplies	$1,800 – $2,200
Computer System	$45,000 – $75,000
Grand Opening Advertising	$5,500 – $12,000
Training Expenses	$44,000 – $85,000
Licenses & Permits	$7,000 – $20,000
Professional Fees	$20,000 – $65,000
Additional Funds – 3 months	$100,000 – $150,000
TOTAL	$1,504,505 – $2,059,010

Note: The table above provides a snapshot of the main costs associated with starting the most common franchise format (as disclosed in the Item 7 of the Franchise Disclosure Document). For a complete overview of all the expenses involved with the various formats offered by the franchisor, please consult the Franchise Disclosure Document.

Initial Franchise Fee

The initial Franchise Fee for the first Black Bear Diner restaurant is $55,000. For existing operators of one or more Black Bear Diner restaurants, the Franchise Fee for subsequent restaurants is structured as follows:

• 1-2 Restaurants: $55,000
• 3 Restaurants: $50,000
• 4-7 Restaurants: $32,000
• 8+ Restaurants: $24,000

The Franchise Fee is paid as a lump sum upon signing the Franchise Agreement and is non-refundable.

Royalty Fee

The Royalty Fee is 4.5% of Gross Sales, payable weekly. The term “Gross Sales” encompasses all revenue from the sale of menu items, gift shop products, banquet and catering services, and any other goods or services, minus specific deductions like sales tax and employee meal discounts.

Marketing Fund Contribution

Franchisees must contribute 1% of Gross Sales to the Marketing Fund, payable weekly. This fee supports system-wide marketing and promotional efforts.

Local Advertising Requirement

Franchisees are obligated to spend an additional 1% of Gross Sales each month on local advertising, subject to the franchisor’s approval.

Grand Opening Advertising

A minimum of $5,500 must be spent on grand opening advertising, to be executed between one week prior to and eight weeks after the restaurant’s opening.

Renewal Fee

For franchise renewals, a fee of $5,000 is required, payable upon signing the renewal documents.

Franchise Pros and Cons

The Pros:

• Site selection and construction: The franchisor has an experienced real estate team to help its franchisees establish and build their restaurants. It helps them with site selection, proprietary demographic and analytic tools, layout, design, and construction.
• Pre-opening training: The brand has a detailed hands-on training program as well as classroom and ongoing training on running their restaurants successfully. It trains its franchisees on culinary procedures, restaurant operations, and management best practices.
• Marketing support: Black Bear Diner embraces a dedicated marketing and advertising department. Franchisees benefit from the development of local store marketing programs, social media monitoring and posting, website maintenance, media planning and placement, and year-round marketing program measurement.

The Cons:

• Not a passive investment: Black Bear Diner does not allow for absentee ownership. Franchisees must be actively involved in the decision-making and day-to-day operations of the restaurants.
• Not a part-time business. The franchise is not a part-time business opportunity. Franchisees must follow the parent company’s working hours.
• Competition: Black Bear Diner experiences a lot of competition from other brands in the industry, such as IHOP, Denny’s and Buffalo Wild Wings to name a few

How to open a Black Bear Diner franchise

Opening a Black Bear Diner franchise involves several steps, designed to ensure you are a good fit for the franchise. Here are the main steps to follow to open a Black Bear Diner franchise.

1. Conduct Initial Research

• Familiarize yourself with the Black Bear Diner brand, its history, and values.
• Understand the brand’s unique selling propositions, such as its thematic dining experience and menu offerings.
• Consider the brand’s presence in your desired location and assess market demand.

2. Review Financial Requirements

• Determine the initial investment needed, including franchise fees, construction costs, equipment, and initial working capital.
• Assess your financial capability to meet these requirements, including liquid capital and overall net worth.
• Understand ongoing fees such as royalties, advertising fees, and potential operational costs.

3. Submit an Inquiry

• Reach out to Black Bear Diner through their franchising website or contact details to express your interest.
• Provide necessary personal and professional information as part of the inquiry process.
• Await a response from the franchisor for preliminary approval and further instructions.

4. Attend Discovery Day

• Once your initial inquiry is approved, you may be invited to a Discovery Day or a similar introductory meeting.
• Use this opportunity to meet the franchisor team, understand the business model in-depth, and clarify any doubts.
• Evaluate the company culture and your fit within the franchise network.

5. Secure Financing

• If required, seek financial assistance through loans or investors to meet the financial prerequisites.
• Consider options such as small business loans, franchising loans, or partnerships for funding.
• Prepare a solid business plan to present to potential lenders or investors.

6. Sign Franchise Agreement

• Upon mutual agreement, review and sign the franchise agreement with Black Bear Diner.
• Understand all the terms and conditions, obligations, and rights conferred by the agreement.
• Consult with a franchise attorney to ensure you fully understand the contract.

7. Site Selection and Approval

• Work with the franchisor to identify a suitable location for your Black Bear Diner franchise.
• The franchisor may provide guidelines and support in selecting a location that meets their criteria.
• The selected site must be approved by the franchisor before proceeding.

8. Training and Support

• Participate in the franchisor’s training program to understand operational procedures, management systems, and service standards.
• Training may include both classroom instruction and hands-on experience at an existing location.
• Take advantage of ongoing support offered by the franchisor in areas such as marketing, operations, and business development.

Disclaimer

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