What is the geographic scope of the post-termination covenant not to compete for a Bambu franchise, measured from the former Franchised Location?
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.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the standard post-termination covenant not to compete restricts a franchisee from engaging in a Competitive Business within a 10-mile radius of their former Franchised Location. This restriction also extends to 10 miles from any other franchised or company-owned Bambu location. A Competitive Business is defined as any business deriving more than 10% of its gross receipts from the preparation or sale of teas, fruit dessert drinks, coffee, or other products similar to those offered by Bambu.
This means that after the termination or expiration of the Franchise Agreement, a former Bambu franchisee (or their immediate family) cannot own, operate, or be involved in any capacity with a competing business within the specified radius. This includes being an owner, investor, partner, director, officer, manager, employee, consultant, representative, or agent. The definition of "immediate family" includes any spouse, domestic partner, children, parents, or siblings.
The covenant not to compete lasts for two years, starting from the termination or expiration date of the agreement, or the date the franchisee ceases to conduct business, whichever is later. If the franchisee breaches this covenant, the two-year period restarts from the date they are legally stopped from competing or voluntarily cease the competitive activity, whichever occurs later.
However, it is important to note that the FDD includes a specific modification for franchisees in Indiana. For these franchisees, the scope of the post-termination covenant not to compete is limited solely to the 10-mile radius of the former Franchised Location, removing the broader restriction related to other Bambu locations. Additionally, the agreement includes a clause that allows a court or arbitrator to modify the restrictive covenants to make them enforceable if they are deemed too broad, or to sever the provision entirely if modification is not possible.