What happens if the Bambu franchisee becomes insolvent?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee becomes insolvent or is adjudicated a bankrupt; or if any action is taken by Franchisee, or by others against Franchisee under any insolvency, bankruptcy or reorganization act, (this provision may not be enforceable under federal bankruptcy law, 11 U.S.C. §§ 101 et seq.); or if Franchisee makes an assignment for the benefit of creditors or a receiver is appointed by Franchisee.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, if a franchisee becomes insolvent, Bambu has the right to terminate the Franchise Agreement effective immediately upon notice.
Specifically, Bambu can terminate the agreement if the franchisee becomes insolvent or is adjudicated bankrupt. This also applies if any action is taken by the franchisee, or by others against the franchisee, under any insolvency, bankruptcy, or reorganization act. The FDD notes that this provision may not be enforceable under federal bankruptcy law. Termination can also occur if the franchisee makes an assignment for the benefit of creditors or if a receiver is appointed for the franchisee.
This means that a Bambu franchisee facing financial difficulties that lead to insolvency or bankruptcy could lose their franchise rights. The franchisee would not have an opportunity to correct the issue. This is a significant risk for potential franchisees, as financial stability is crucial for maintaining the franchise. Franchisees should carefully consider their financial situation and business plan to mitigate the risk of insolvency and potential termination by Bambu.