Does the Bambu franchise agreement prevent a franchisee from attempting to divert the employment of any employee of Bambu to any Competitive Business?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
l continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
21. RESTRICTIVE COVENANTS
- 21.1 Non-Competition During Term. Franchisee acknowledges that, in addition to the license of the Marks hereunder, Bambu has also licensed commercially valuable information which comprises and is a part of the Bambū system, including without limitation, operations, marketing, advertising and related information and materials and that the value of this information derives not only from the time, effort and money which went into its compilation, but from the usage of the same by all the franchisees of Bambu using the Marks and Bambū system. Therefore, other than the Bambū shoppe licensed herein or authorized by separate agreement with Bambu, neither Franchisee nor any of Franchisee's officers, directors, shareholders, members, managers or partners, nor any member of his or their immediate families, shall during the term of this Agreement:
- a. have any direct or indirect controlling interest as a disclosed or beneficial owner in a "Competitive Business" as defined below;
- b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or
- c. divert or attempt to divert any business related to, or any customer or account of the Bambū shoppe, Bambu's business or any other Bambū franchisee's business, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of Bambu or another franchisee licensed by Bambu to use the Marks and Bambū system, to any Competitive Business by any direct inducement or otherwise.
The term "Competitive Business" as used in this Agreement shall mean any business operating, or 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, Franchisee shall not be prohibited 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.
The term "immediate family" as used in this Article 21 shall mean and include any spouse, domestic partner, children, parents or siblings.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to the 2025 Bambu Franchise Disclosure Document, the franchise agreement initially includes a restriction on franchisees attempting to divert the employment of any employee of Bambu or another franchisee to a Competitive Business during the term of the agreement. Specifically, the agreement states that neither the franchisee, nor their officers, directors, shareholders, members, managers, partners, or immediate family members can divert or attempt to divert the employment of any employee of Bambu or another franchisee to a Competitive Business. A Competitive Business is defined as any business deriving 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.
However, the FDD includes a modification for franchisees in Minnesota. For Minnesota franchisees, the franchise agreement is amended to comply with Minnesota Statutes Section 181.991, which prohibits a franchisor from restricting a franchisee from soliciting or hiring an employee of the franchisor or another franchisee of the same franchisor. Therefore, any restrictions in Section 21.1.c of the Bambu franchise agreement that would prevent a Minnesota franchisee from soliciting or hiring employees of Bambu or other Bambu franchisees are deemed deleted.
This means that while the standard Bambu franchise agreement aims to prevent franchisees from poaching employees to work for competing businesses, this restriction does not apply to franchisees operating in Minnesota due to state law. Prospective franchisees should be aware of this difference and understand how it affects their ability to recruit employees, especially if they are considering opening a franchise in Minnesota. Franchisees outside of Minnesota should be aware of the restrictions and ensure they do not violate the non-solicitation clause, while those in Minnesota have more flexibility in their hiring practices.