Is an Associate of a Bambu franchise allowed to perform services for a Competitive Business during their affiliation?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Noncompetition Covenant. Associate covenants and agrees that, during the term of his or her Affiliation, except in conjunction with Franchisee's Bambū shoppe in a manner authorized by Bambu and Franchisee, Associate shall not, either directly or indirectly through any member of Associate's immediate family, separate business entity, or otherwise:
- (a) have any direct or indirect controlling interest as a disclosed or beneficial owner in a Competitive Business, defined below;
- (b) perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business;
- (c) divert or attempt to divert any business related to Bambu, Franchisee or any other franchisee of Bambu to any Competitive Business by direct inducement or otherwise; or
- (d) divert or attempt to divert the employment of any employee or representative of Bambu, Franchisee or any other franchisee of Bambu to any Competitive Business by any direct inducement or otherwise.
The term "Competitive Business" as used in this Agreement means any business operating, or any business granting franchises or licenses to others to operate a retail or wholesale business deriving more than 10 percent of its gross receipts from preparation of or sale of teas, fruit dessert drinks, coffee or other products now or in the future offered or sold by Bambū shoppes. Notwithstanding the foregoing, Associate will not be prohibited by this Agreement from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5 percent or less of that class of securities issued and outstanding.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, an Associate is restricted from performing services for a Competitive Business during their affiliation with the franchise. Specifically, an Associate cannot perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business, except in conjunction with the Franchisee's Bambu shop in a manner authorized by Bambu and the Franchisee.
The term "Competitive Business" is defined as any business that derives more than 10 percent of its gross receipts from the preparation or sale of teas, fruit dessert drinks, coffee, or other products currently or potentially offered by Bambu shops. This restriction aims to protect Bambu's market position and prevent the leakage of confidential information and operational strategies to competing businesses.
However, the FDD states that an Associate is not prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5 percent or less of that class of securities issued and outstanding. This exception allows Associates to make minor investments in publicly traded competitors without violating the non-competition agreement. These restrictions are put in place to protect Bambu's interests and maintain a competitive edge in the market.