Is a Bambu franchisee prohibited from operating a Competitive Business within 10 miles of any company or affiliate owned Bambu shoppe after termination?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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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.
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 engaging in a Competitive Business within a 10-mile radius of a company or affiliate-owned Bambu location after the termination or expiration of their franchise agreement. This restriction applies for two years, beginning from the termination or expiration date, or the date the franchisee ceases business operations, whichever is later. This covenant extends not only to the franchisee but also to their officers, directors, shareholders, members, managers, and partners. The restriction also applies to any indirect interest through immediate family members.
The FDD defines a "Competitive Business" as any business that derives more than 10 percent 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 shoppes. However, a franchisee is not prohibited from owning securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter and represent 5 percent or less of the outstanding securities.
If a franchisee or any affiliated party breaches this non-compete clause, the two-year period restarts from the date they are legally stopped from competing or when they voluntarily cease the competitive activity, whichever occurs later. This post-termination covenant is designed to protect Bambu's market and brand integrity by preventing former franchisees from directly competing using the knowledge and resources gained during their franchise tenure.