What is the consequence if a Bambu franchisee's Principal negligently 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 an event of default under the franchise agreement.

Item 23 of the Bambu FDD lists several conditions that constitute default of the franchise agreement. One of these conditions is the violation of restrictive covenants. This means that if a Principal (e.g., owner, director, officer) of the Bambu franchise negligently violates the restrictive covenants outlined in Article 21 of the agreement, Bambu has grounds to declare the franchisee in default.

Defaulting on the franchise agreement can lead to termination of the franchise, loss of investment, and other legal and financial repercussions. Prospective franchisees should carefully review Article 21 and understand the restrictive covenants and ensure that all Principals are aware of and compliant with these terms to avoid potential default situations.