Does Bambu's assessment of late fees constitute a commitment to extend credit to a Bambu franchisee?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
taxes added to the sales price and collected from the customer, and less any bona fide refunds, rebates, discounts, and tips.
- 12.5 Late Payments. In the event that Franchisee fails to have sufficient funds in its account or otherwise fails to pay the Marketing and Technology Fee, Royalty Fee, or other payments due to Bambu as of the date due, Franchisee shall owe in addition to the Marketing and Technology Fee, Royalty Fee, or other amounts due, interest at the highest applicable legal rate for open account credit, not to exceed 1½ percent per month. Franchisee acknowledges that this Section 12.5 shall not constitute Bambu's or its affiliates' agreement to accept such payments after they are due or a commitment to extend credit to or otherwise finance operations of the shoppe. In no event shall Franchisee be required to pay interest at a rate greater than the maximum interest rate permitted by applicable law. Bambu reserves the right to automatically assess Franchisee a monthly $50 late charge for any Marketing and Technology Fee payment, R
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the assessment of late fees does not constitute a commitment to extend credit to the franchisee. The document states that if a franchisee fails to have sufficient funds or fails to pay the Marketing and Technology Fee, Royalty Fee, or other payments, they will owe interest at the highest applicable legal rate for open account credit, not to exceed 1½ percent per month, in addition to the amount already due. Bambu also reserves the right to automatically assess a monthly $50 late charge for any late Marketing and Technology Fee payment, Royalty Fee payment, or other payment due under the agreement.
However, the FDD explicitly states that these late payment provisions do not represent an agreement by Bambu or its affiliates to accept late payments or a commitment to extend credit or finance the shoppe's operations. This means that while Bambu charges interest and late fees on overdue amounts, it is not obligated to allow franchisees to make late payments or to provide any form of financing.
This is a fairly standard clause in franchise agreements. Franchisors typically want to reserve the right to collect late payment penalties without being obligated to provide financing or accept habitually late payments. Franchisees should be aware that incurring late fees, even if paid, could potentially lead to further action from Bambu if it constitutes a breach of the franchise agreement.