What is considered a 'Competitive Business' in relation to the noncompetition covenant for a Bambu franchise Associate?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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, a 'Competitive Business' concerning the noncompetition covenant for a Bambu franchise Associate is defined as any business that derives more than 10 percent of its gross receipts from the preparation or sale of specific products. These products include teas, fruit dessert drinks, coffee, or other items currently or in the future offered or sold by Bambu shops. This definition is important because it sets the boundaries for what activities an associate must avoid to comply with the noncompetition agreement.
However, there is an exception to this restriction. An associate is not prohibited from owning securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter. This exception applies only if the securities represent 5 percent or less of the total outstanding securities of that class. This allows associates to invest in publicly traded companies that might technically be considered competitors, as long as the investment remains below a certain threshold.
This definition is crucial for associates as it dictates their actions both during their affiliation with the franchisee and for a period after their affiliation ends. Understanding what constitutes a Competitive Business helps associates avoid potential breaches of the noncompetition agreement, which could lead to legal repercussions. Prospective associates should carefully consider this definition and how it might impact their future business or investment opportunities.