How do the franchisee's obligations for site selection in Item 9 relate to the territory restrictions outlined for a Bambu franchise in Item 12?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
| Obligation | Section in Agreements | Disclosure Document Item |
|---|---|---|
| (k) Territorial development and sales | Article 3 of FA; Sections 1.1 and 3.1 | Item 12 |
| quotas | of MUDA |
ITEM 12
TERRITORY
You may operate your shoppe and use the Marks and the Bambū system only at the Franchised Location which has been approved by us. You may not operate another Bambū shoppe at any site other than the Franchised Location without first obtaining our written consent, which will require you acquiring another franchise and entering into another franchise agreement, the terms of which may be materially different than the terms set forth in the Franchise Agreement attached to this Disclosure Document. We base our approval of your proposed Franchised Location on a variety of factors including the visibility and demographics of the proposed Franchised Location. See Item 11. If you execute your Franchise Agreement before you select and we approve a site, we will designate a "Designated Area" within which you must find a Franchised Location. The designation of the Designated Area does not in any manner grant to you any continuing territorial rights in or to the Designated Area.
Your Franchise Agreement designates a geographic area ("Protected Area") in which we will not establish and operate, or franchise anyone else to establish and operate, other Bambū shoppes, except as described below. The Protected Area may be defined by a radius around the shoppe, zip code boundaries, street boundaries or similar designations. The placement of a shoppe and the designation of a Protected Area by us depends on various demographic and market conditions around a proposed Franchised Location, including density of population, number of competitors and other food uses in the market, site availability, traffic, access and growth potential.
You will not receive an exclusive territory. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Under the terms of the MUD Agreement, we grant to you the right to establish, according to a schedule, a set number of Bambū shoppes that you and we agree upon within a larger geographical territory ("Development Area"). A Development Area is usually defined by street boundaries, city, county or state limits or by other reasonable boundaries. The number of Bambū shoppes to be developed may be adjusted depending on demographics and other characteristics of a Development Area, including population density, income and other characteristics of the surrounding area, natural boundaries, extent of competition and whether the proposed Development Area is urban, suburban or rural in nature. You do not have a right of first refusal or similar contractual right to acquire additional Bambū franchises in contiguous areas. Except as described below, we may not establish or franchise any other person or entity to establish Bambū shoppes using the Marks and Bambū system within the Development Area for so long as the MUD Agreement is in effect. However, nothing in the MUD Agreement prevents, prohibits, or otherwise restricts at any time the operation of any Bambū shoppes in the Development Area which are operated under any existing franchise agreements, or the grant of successor franchise rights related to those existing franchise agreements.
The continuation of your right to your Development Area during the term of the MUD Agreement is dependent on you meeting the Development Schedule in the agreement. The Development Schedule requires you to open and continuously operate at least a certain number of Bambū shoppes in the Development Area by certain deadlines. Failure to meet the Development Schedule may result in the termination of your development rights. The termination of your MUD Agreement solely for a failure to meet the Development Schedule will not terminate or affect your rights or obligations under any franchise agreements entered into between you and us prior to the date of termination of the MUD Agreement. Each shoppe opened under a MUD Agreement is subject to the terms and conditions of the franchise agreement entered into for that shoppe as discussed above. You do not receive an exclusive territory under the MUD Agreement. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
The designation of your Franchised Location, Protected Area or, if applicable, Development Area, does not grant you the exclusive right to any particular market or customers. You may advertise your Bambū shoppe in any geographic area and you may serve all customers who enter your shoppe, subject to reasonable restrictions and policies as we may place on your activities which may include restrictions and policies regarding: (1) electronic advertising (including Internet advertising); (2) the content, methods, media and means used to advertise, market and promote your shoppe; and (3) limitations on advertising, marketing or conducting business in areas outside of your Protected Area. Other Bambū franchisees have the same rights to conduct advertising anywhere and provide programs and products to all persons who enter
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, Item 9 and Item 12 outline the interplay between a franchisee's site selection obligations and the territorial rights granted (or not granted). Item 9(k) references Article 3 of the Franchise Agreement and Sections 1.1 and 3.1 of the Multi-Unit Development Agreement (MUDA) as they relate to territorial development and sales quotas, further connecting it to Item 12. Item 12 clarifies that franchisees do not receive an exclusive territory, and may face competition from other franchisees, company-owned outlets, or other channels.
For a single-unit Bambu franchise, the franchisee must operate solely from an approved Franchised Location. If a location isn't specified initially, the franchisee is assigned a Designated Area within which they must find a site, subject to Bambu's approval. While a Protected Area is designated around the Franchised Location where Bambu will not open another store, this does not grant exclusive rights to any market or customers. Franchisees can advertise anywhere and serve any customer who visits their store, but Bambu can impose restrictions on advertising activities, especially outside the Protected Area.
For franchisees entering into a Multi-Unit Development Agreement (MUDA), they gain the right to establish multiple Bambu stores within a larger Development Area, according to an agreed-upon schedule. The continuation of these development rights depends on meeting the agreed-upon Development Schedule. Even with a Development Area, franchisees do not receive an exclusive territory and may face competition. Bambu retains the right to operate or franchise other stores outside the Protected Area, and the designation of a Development Area does not grant exclusive rights to any particular market or customers. Bambu also retains the right to modify franchise agreements based on the franchisee's specific circumstances or territory.