If the Bambu franchise agreement is terminated due to the franchisee's default, what options does Bambu have regarding other agreements?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
24.16 Cross-Default and Cross Termination Provisions.
- a. A default by Franchisee under this Agreement will be deemed a default of all agreements between Franchisee and/or any company(ies) affiliated with Franchisee, on the one hand, and Bambu and/or any company(ies) affiliated with Bambu, on the other hand (the "Other Agreements"). A default by Franchisee and/or any company(ies) affiliated with Franchisee under any of the Other Agreements will be deemed a default under this Agreement. A default by any guarantor(s) of this Agreement or of any of the Other Agreements will be deemed a default of this Agreement.
- b. If this Agreement is terminated as a result of a default by Franchisee, Bambu may, at its option, elect to terminate any or all of the Other Agreements. If any of the Other Agreements is terminated as a result of a default by Franchisee and/or any company(ies) affiliated with Franchisee, Bambu may, at its option, elect to terminate this Agreement. It is agreed that an incurable or uncured default under this Agreement or any of the Other Agreements will be grounds for termination of this Agreement and/or any and all of the Other Agreements without additional notice or opportunity to cure.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a default by the franchisee under the Franchise Agreement can trigger consequences for other agreements in place between the franchisee (or its affiliates) and Bambu (or its affiliates). Specifically, Bambu has the option to terminate any or all of these other agreements if the Franchise Agreement is terminated due to the franchisee's default. This provision is known as a cross-default and cross-termination clause.
This means that if a Bambu franchisee fails to meet their obligations under the Franchise Agreement, such as maintaining brand standards, making required payments, or adhering to operational guidelines, Bambu can terminate the franchise agreement. Furthermore, Bambu can also choose to terminate any other agreements that exist between the franchisee and Bambu. These other agreements could include leases, financing arrangements, supply agreements, or any other contracts.
The FDD states that an incurable or uncured default under the Franchise Agreement or any of the other agreements provides grounds for termination of the Franchise Agreement and/or any and all of the other agreements without additional notice or opportunity to cure. This clause creates a significant risk for franchisees, as a single default can have cascading effects across their entire relationship with Bambu.
Prospective franchisees should carefully review all agreements with Bambu and understand the implications of the cross-default and cross-termination provisions. It is important to maintain compliance with all agreements to avoid the risk of losing not only the franchise but also other related business arrangements.