In this scenario the current owner would then have to come up with $505k every year to hold onto their little boutique brand. Or possibly more every year if Hershey's ratcheted up the bid. If they held out more than a few years then even with the terminal payout, they would end up paying more than they would've earned from just giving into Hershey's in the first place.

The current owner would have to come up with 1% of the value of the brand every year, if they want to keep it.

Yes, that's exactly how that tax is supposed to work. Duh.