Does the Bambu franchise agreement prevent a franchisee's immediate family from having an indirect interest in a Competitive Business after termination?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
tanding.
The term "immediate family" as used in this Article 21 shall mean and include any spouse, domestic partner, children, parents or siblings.
21.2 Post-Termination Covenant Not to Compete. Upon termination or expiration of this Agreement for any reason, Franchisee and its officers, directors, shareholders, members, managers and/or partners agree that, for a period of two years commencing on the effective date of termination or expiration, or the date on which Franchisee ceases to conduct business, whichever is later, neither Franchisee nor its officers, directors, shareholders, members, managers and/or partners shall have any direct or indirect interest (through a member of any immediate family of Franchisee or its owners or otherwise) as a disclosed or beneficial owner, investor, partner, director, officer, member, employee, consultant, representative or agent or in any other capacity in any Competitive Business, defined in Section 21.1 above, located or operating within a 10 mile radius of the Franchised Location, within 10 miles of any other franchised Bambū shoppe or, within 10 miles of any company or affiliate owned Bambū shoppe. If Franchisee or any of the affiliated parties breaches this Section, the two-year period shall start on the date that such person is enjoined from competing or stops competing, whichever is later. Franchisee and its officers, directors, shareholders,
members, managers and/or partners acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting such skills. Consequently, enforcement of the covenants made in this Section will not deprive them of their personal goodwill or ability to earn a living. If the restrictions concerning the time duration, geography, affected individuals or entities, or breadth of activity contained in Sections 21.1 and 21.2 are held to be unenforceable under any applicable law, the arbiter of any dispute regarding this Agreement is hereby authorized to and shall make only such limited changes as are necessary to make the restrictions enforceable.
- 21.3 Confidentiality of Proprietary Information.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the franchise agreement includes post-termination covenants that restrict both the franchisee and their immediate family from engaging in competitive business activities. Specifically, for a period of two years after termination or expiration of the franchise agreement, neither the franchisee nor any member of their immediate family can have a direct or indirect interest in a Competitive Business within a defined radius. This restriction applies to interests held as an owner, investor, partner, director, officer, manager, employee, consultant, representative, or agent.
The term "Competitive Business" is defined as any business that derives more than 10% of its gross receipts from the preparation or sale of teas, fruit dessert drinks, coffee, or other products offered by Bambu. However, the agreement does allow the ownership of securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter and represent 5% or less of the outstanding securities.
This non-compete clause extends to a 10-mile radius around the franchised location, any other franchised Bambu shop, or any company-owned Bambu shop. The "immediate family" includes a spouse, domestic partner, children, parents, or siblings. If a franchisee or their family member breaches this covenant, the two-year restriction period restarts from the date the competitive activity ceases or is legally stopped. This provision ensures that former franchisees and their close relatives do not leverage inside knowledge or relationships to compete with Bambu within a reasonable timeframe and geographic area.