Does the definition of 'transfer' for a Bambu franchise include involuntary assignments?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
As used in this Agreement, the term "transfer" shall mean and include the voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition by Franchisee (or any of its owners) of any interest in: (1) this Agreement; (2) the ownership of Franchisee; or (3) the shoppe or any assets of the shoppe.
The term "transfer" shall also mean and include any change in Franchisee resulting from a divorce, insolvency, corporate or partnership dissolution proceeding, merger, change of control, those transfers described in Section 17.5, by operation of law or, in the event of the death of Franchisee, or an owner of Franchisee by will, declaration of or transfer in trust or under the laws of intestate succession.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the term "transfer" includes both voluntary and involuntary assignments. Specifically, the definition encompasses changes in the franchisee resulting from events like divorce, insolvency, corporate or partnership dissolution, merger, or change of control. It also includes transfers that occur by operation of law or in the event of the franchisee's death, whether through a will, declaration of trust, or intestate succession.
This broad definition of "transfer" has significant implications for prospective Bambu franchisees. It means that any change in ownership or control of the franchise, whether planned or unplanned, is subject to Bambu's approval and the conditions outlined in the franchise agreement. This includes scenarios where the franchisee's personal circumstances, such as divorce or death, necessitate a change in ownership.
The inclusion of involuntary transfers ensures that Bambu maintains control over who operates its franchises, even in unforeseen circumstances. Franchisees need to be aware that their ability to pass on the franchise to heirs or sell it during financial hardship is subject to Bambu's consent and adherence to specific requirements. This could involve the transferee meeting certain qualifications, completing training, and signing a new franchise agreement.
Bambu's right to approve or disapprove a transfer applies if the franchisee is a partnership or business association, to the addition or deletion of a partner, or if the franchisee is a corporation or LLC, to any transfer of 15% or more of the ownership interests. If the franchisee is an individual, the transfer to a corporation or entity controlled by them will be conditioned upon the individual's continuing personal guarantee and a limitation on the entity's business activity to operating the Bambu shoppe.