What is the consequence if a Bambu franchisee's Principal intentionally violates the restrictive covenants?

According to Bambu's 2025 Franchise Disclosure Document, if a franchisee, its affiliates, Principals, or any individual subject to the Restrictive Covenants intentionally or negligently violates those covenants, it constitutes a default under the agreement. This is outlined in Item 23, which discusses various scenarios that can lead to a default notice from Bambu.

Specifically, the FDD states that 'Violation of Restrictive Covenants' occurs 'If Franchisee, its affiliates, Principals or any individual subject to the Restrictive Covenants described in Article 21 intentionally or negligently violates those covenants.' This means that any intentional or negligent breach of the restrictive covenants by the franchisee, their affiliates, Principals, or individuals bound by these covenants as detailed in Article 21, can trigger a default.

While the excerpt specifies that such a violation constitutes a default, it does not detail the specific consequences of a default. Typically, a default allows the franchisor to take actions such as demanding immediate correction of the issue, imposing penalties, or even terminating the franchise agreement if the default is not cured within a specified timeframe. A prospective franchisee should carefully review Article 21 and other relevant sections of the Franchise Agreement to fully understand the restrictive covenants and the potential ramifications of violating them.