Is a Bambu franchisee prohibited from diverting business from Bambu's business to a Competitive Business during the term of the agreement?
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.
21.2 Post-Termination Covenant Not to Compete.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, franchisees are restricted from diverting business to a Competitive Business during the term of the agreement. Specifically, franchisees cannot divert or attempt to divert business related to the Bambu shop, Bambu's business, or any other Bambu franchisee's business. This includes diverting customers or accounts, or attempting to divert the employment of any employee of Bambu or another franchisee to a Competitive Business.
The term "Competitive Business" is defined as any business operating, or any business 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 Bambu shops. However, 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 percent or less of that class of securities issued and outstanding.
This restriction is in place to protect the Bambu system and the investment made by Bambu and its franchisees in building the brand. The non-compete agreement ensures that franchisees focus on growing their Bambu shop and do not use the knowledge and resources gained from the franchise to benefit a competing business. This type of restriction is common in franchising to maintain brand integrity and prevent unfair competition among franchisees.
Minnesota franchisees should note that Minnesota Statutes Section 181.991 prohibits a franchisor from restricting, restraining, or prohibiting in any way a franchisee from soliciting or hiring an employee of the franchisor or an employee of a franchisee of the same franchisor. Any such restrictions in Section 21.1.c are deemed deleted for Minnesota franchisees.