What is the consequence if a receiver is appointed for a Bambu franchisee's business?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
Insolvency; Assignments.
If Franchisee becomes insolvent or is adjudicated a bankrupt; or if any action is taken by Franchisee, or by others against Franchisee under any insolvency, bankruptcy or reorganization act, (this provision may not be enforceable under federal bankruptcy law, 11 U.S.C. §§ 101 et seq.); or if Franchisee makes an assignment for the benefit of creditors or a receiver is appointed by Franchisee.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, if a receiver is appointed for a Bambu franchisee, it constitutes grounds for default under the franchise agreement. Specifically, if a receiver is appointed by the franchisee, this triggers a default event. This falls under the broader category of 'Insolvency; Assignments.'
This means that Bambu has the right to terminate the franchise agreement if a franchisee becomes insolvent, is adjudicated bankrupt, takes action under any insolvency, bankruptcy, or reorganization act, or makes an assignment for the benefit of creditors. The appointment of a receiver is included in these conditions. However, the FDD notes that the provision regarding action taken under bankruptcy law may not be enforceable under federal bankruptcy law.
In practical terms, if a Bambu franchisee's business faces severe financial difficulties leading to the appointment of a receiver, Bambu can take steps to end the franchise relationship. This protects Bambu from potential damage to its brand and system that could arise from a poorly managed or failing franchise location. Franchisees should be aware of the financial risks involved in operating the business and the potential consequences of insolvency.