What constitutes a 'Competitive Business' according to the Bambu franchise agreement?

According to the 2025 Bambu Franchise Disclosure Document, a "Competitive Business" is defined as any retail or wholesale 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 in the future offered by Bambu shops. This definition is relevant to the non-compete clauses within the franchise agreement, both during the term of the agreement and after its termination.

This definition has significant implications for prospective franchisees. During the franchise term, franchisees are restricted from having a controlling interest in such a business, performing services for it, or diverting business or employees to it. After the franchise agreement ends, the franchisee is restricted from operating a competitive business within a 10-mile radius of their former Bambu location or any other Bambu shop.

However, the agreement does allow franchisees to own securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter, provided that the holdings represent 5 percent or less of the outstanding securities. This exception provides a limited avenue for franchisees to invest in competing businesses without violating the franchise agreement.

It is important for potential franchisees to fully understand these restrictions, as violating them could lead to legal action from Bambu. Franchisees should carefully consider their long-term business plans and investment strategies in light of these non-compete provisions.