Does the Bambu franchise agreement require intentional or negligent violation of restrictive covenants for termination to occur?

According to Bambu's 2025 Franchise Disclosure Document, the franchise agreement allows for termination if a franchisee, their affiliates, principals, or any individual subject to restrictive covenants intentionally or negligently violates those covenants. This means that Bambu can terminate the franchise agreement not only if the franchisee deliberately violates the restrictive covenants, but also if the violation occurs due to carelessness or a lack of reasonable diligence.

This provision in the Bambu franchise agreement is significant for prospective franchisees because it broadens the scope of actions that could lead to termination. Franchisees must be extremely diligent in adhering to the restrictive covenants outlined in Article 21 of the agreement. A simple oversight or unintentional mistake could be grounds for termination, which is a stricter standard than requiring intentional misconduct.

It is important for potential Bambu franchisees to carefully review and understand the restrictive covenants in Article 21, as well as to implement procedures and training to ensure compliance. This will help minimize the risk of unintentional violations that could jeopardize their franchise agreement. Franchisees should seek legal counsel to fully understand their obligations and potential liabilities under this clause.