Does a default by any company affiliated with the Bambu franchisee under 'Other Agreements' constitute a default under the Bambu franchise agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
24.16 Cross-Default and Cross Termination Provisions.
- a. A default by Franchisee under this Agreement will be deemed a default of all agreements between Franchisee and/or any company(ies) affiliated with Franchisee, on the one hand, and Bambu and/or any company(ies) affiliated with Bambu, on the other hand (the "Other Agreements"). A default by Franchisee and/or any company(ies) affiliated with Franchisee under any of the Other Agreements will be deemed a default under this Agreement. A default by any guarantor(s) of this Agreement or of any of the Other Agreements will be deemed a default of this Agreement.
- b. If this Agreement is terminated as a result of a default by Franchisee, Bambu may, at its option, elect to terminate any or all of the Other Agreements. If any of the Other Agreements is terminated as a result of a default by Franchisee and/or any company(ies) affiliated with Franchisee, Bambu may, at its option, elect to terminate this Agreement. It is agreed that an incurable or uncured default under this Agreement or any of the Other Agreements will be grounds for termination of this Agreement and/or any and all of the Other Agreements without additional notice or opportunity to cure.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a default by a company affiliated with the franchisee under 'Other Agreements' can trigger a default under the Bambu franchise agreement. Specifically, if the franchisee or any affiliated company defaults on any agreement with Bambu or its affiliates, it is considered a default under the franchise agreement. This is known as a cross-default provision.
This cross-default provision means that Bambu can terminate the franchise agreement if the franchisee or its affiliates fail to meet their obligations under any agreement with Bambu. This gives Bambu a broad right to terminate the franchise agreement based on defaults occurring outside the specific terms of the franchise agreement itself.
Furthermore, if the franchise agreement is terminated due to a default by the franchisee, Bambu has the option to terminate any or all of the 'Other Agreements'. Conversely, if any of the 'Other Agreements' are terminated because of a default by the franchisee or an affiliated company, Bambu can choose to terminate the franchise agreement. The FDD states that an incurable or uncured default under either the franchise agreement or any of the 'Other Agreements' provides grounds for terminating both, without additional notice or opportunity to cure.
This clause creates a significant risk for franchisees, as it broadens the scope of what constitutes a default and increases the potential for termination. Prospective franchisees should carefully review all agreements with Bambu and its affiliates to fully understand their obligations and the potential consequences of a default.