What is the geographic scope of the fee deferral condition imposed on Bambu by the California Department?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following shall be added at the end of Section 2.1:
The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations. The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business. For California franchisees who sign a MUD Agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the California Department has imposed a fee deferral condition specifically for franchisees operating in California. This condition mandates that Bambu must defer the collection of all initial fees from California franchisees. This deferral lasts until Bambu has fulfilled all of its pre-opening obligations as outlined in the franchise agreement, and the franchisee has opened their Bambu location for business.
For franchisees in California who sign a MUD (Multi-Unit Development) Agreement with Bambu, the fee deferral extends to both the development and initial fees. These fees, which are typically associated with opening a specific unit within the franchisee's development schedule, are deferred until that particular unit is open and operating. This ensures that California franchisees are not required to pay these fees upfront but rather after the unit is generating revenue.
The California Department determined that Bambu had not adequately demonstrated that it was sufficiently capitalized and/or that it must rely on franchise fees to fund its operations. This determination led to the imposition of the fee deferral condition to protect potential franchisees in California. This requirement provides a financial safeguard for franchisees, aligning fee payments with the commencement of business operations and reducing the initial financial burden.