Can a Bambu franchisee divert business from another Bambu franchisee to a Competitive Business during the term of the agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to the 2025 Bambu Franchise Disclosure Document, during the term of the agreement, a franchisee is restricted from diverting business from their own Bambu shop, Bambu's business, or another Bambu franchisee's business to a Competitive Business. This restriction includes any attempts to divert customers, accounts, or employees through direct inducement or other means. A 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 currently or in the future offered by Bambu shops.
This non-compete clause ensures that franchisees focus on growing their Bambu business and do not use their knowledge or resources gained from the franchise to benefit a competing business. It protects the Bambu system and the investments of all franchisees within the system. The FDD specifies that this restriction applies not only to the franchisee but also to their officers, directors, shareholders, members, managers, partners, and immediate family members.
However, the FDD also states that franchisees are not 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% or less of that class of securities issued and outstanding. This exception allows franchisees to make passive investments in publicly traded companies that may be considered competitors, as long as the investment remains below a certain threshold and does not represent a controlling interest.