What is the effect of the California Rider on Section 4.1 of the Bambu Franchise Agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
UNITED STATES RIDERS TO MUD AGREEMENT
CALIFORNIA RIDER TO MUD AGREEMENT
- The following shall be added at the end of Section 2.1:
The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a MUD Agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open
- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to the 2025 Bambu Franchise Disclosure Document, the California Rider to the MUD (Multi-Unit Development) Agreement modifies Section 4.1 of the Franchise Agreement by deferring the collection of initial fees from California franchisees. This deferral is in place until Bambu has completed all pre-opening obligations and the franchisee is open for business. The California Department has determined that Bambu has not demonstrated adequate capitalization or relies on franchise fees to fund operations, leading to this fee deferral condition. This applies to California franchisees who sign a MUD Agreement, where the payment of development and initial fees for a specific unit in the development schedule is deferred until that unit is open. This modification is implemented because the franchisor has not demonstrated they are adequately capitalized and/or that they must rely on franchise fees to fund their operations.
This means that for franchisees in California, they will not be required to pay the initial franchise fees until Bambu has fulfilled its obligations to help them get their location up and running. This could be a significant benefit for franchisees as it reduces their upfront financial burden and aligns the franchisor's interests with the franchisee's success in opening the business. It also provides some assurance that Bambu is committed to supporting the franchisee through the initial setup phase.
Additionally, the California Rider includes a provision stating that no statement, questionnaire, or acknowledgment signed by the franchisee can waive claims under California franchise law, including fraud in the inducement, or disclaim reliance on statements made by Bambu or its representatives. This provision supersedes any other conflicting terms in any document related to the franchise agreement, offering further protection to the franchisee under California law.