Is a Bambu franchisee allowed to participate as a party in a class action against Bambu?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
- a. Bambu and Franchisee agree that arbitration will be conducted on an individual basis only. Neither party shall commence any arbitration with a third party against the other, or join with any third party in any arbitration involving Bambu and Franchisee other than the Bambu Affiliates and the Franchisee Affiliates. Further, neither Bambu nor Franchisee shall attempt to consolidate or otherwise combine in any manner an arbitration proceeding involving Bambu and Franchisee with another arbitration of any kind, nor shall Bambu or Franchisee attempt to certify a class or participate as a party in a class action against the other.
- b. The foregoing notwithstanding, in the event Franchisee controls, is controlled by or is in active concert with another franchisee, distributor, or developer of Bambu, or there is a guarantor of some or all of the Franchisee's obligations to Bambu, then the joinder of those parties to any arbitration between Bambu and Franchisee shall be permitted, and in all events, the joinder of an owner, director, officer, manager, partner or other representative or agent of Franchisee shall be permitted.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a franchisee is restricted from participating in a class action against the franchisor. The franchise agreement explicitly states that neither Bambu nor the franchisee can attempt to certify a class or participate as a party in a class action against the other. This clause is designed to ensure that any disputes are handled on an individual basis through arbitration.
This restriction has significant implications for prospective franchisees. It means that if a franchisee has a grievance against Bambu, they must pursue it independently, bearing the full cost and effort of the legal process. They cannot join forces with other franchisees who may have similar complaints to share the burden and potentially strengthen their legal position. This can be a disadvantage, especially if the issue affects multiple franchisees, as a class action could be a more efficient and cost-effective way to address the problem.
However, there is an exception. If a franchisee is controlled by, controls, or is in active concert with another Bambu franchisee, distributor, or developer, or if there is a guarantor of the franchisee's obligations to Bambu, then the joinder of those parties to any arbitration between Bambu and the franchisee is permitted. Additionally, the joinder of an owner, director, officer, manager, partner, or other representative or agent of the franchisee is also allowed. This exception provides some flexibility in cases where there are closely related business entities or individuals involved.
Overall, the restriction on class actions is a common practice in franchising, intended to limit the franchisor's exposure to large, complex lawsuits. However, prospective Bambu franchisees should carefully consider the implications of this clause and understand that they will generally need to pursue any legal claims against the franchisor on their own.