If a Bambu franchise is terminated due to the franchisee's default, what financial obligations does the franchisee have?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
| | Franchisee's obligations on termination/non-renewal | Sections 19.3 and 19.4 of FA; Section 4.5 of MUDA | Pay outstanding amounts; pay an amount equal to the monthly Royalty Fees due over the remaining term under the Franchise Agreement if terminated due to your default; de-identification of shoppe; return of confidential information; covenant not to compete (see also o. and r. below); others. | | (j) | Assignment of contract by franchisor | Section 17.6 of FA; Section 5.1 of MUDA | No restriction on our right to assign. | | (k) | "Transfer" by franchisee – defined | Section 17.1 of FA; Section 5.2 of MUDA | Includes transfer of franchise agreement or shoppe, any change in ownership of franchisee entity, or the transfer of the assets of the shoppe. | | (1) | Franchisor approval of transfer by franchisee | Sections 17.3 and 17.8 of FA; Section 5.2 of MUDA | We have the right to approve all transfers, we may not unreasonably withhold our consent. We have the right to approve any public or private offering. | | (m) | Conditions for franchisor approval of transfer | Sections 17.2 and 17.8 of FA; Sections 5.2 and 5.3 of MUDA | For the Franchise Agreement: The following conditions will apply: Timely notice to us, transferee qualifies, all amounts due are paid in full and any defaults cured, transferee completes training, transfer fee paid, then current contract signed (which may contain terms and conditions materially different from the original Franchise Agreement), franchisee signs general release, noncompetition covenant, if requested upgrade shoppe, transferor remains liable. Review of public or private offering materials. For the MUD Agreement: The following conditions will apply in addition to those listed above: Fee for each undeveloped Bambū shoppe paid. | | (n) | Franchisor's right of first refusal to acquire franchisee's business | Section 17.4 of FA; Section 5.4 of MUDA | For a 30 day period, we have the right to match third party offer. | | (o) | Franchisor's option to purchase franchisee's business | Section 19.3 | We may buy your Bambū shoppe or a portion of the assets of the Bambū shoppe upon termination or non-renewal. |
Source: Item 17 — (FDD pages 44–46)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, if the Franchise Agreement is terminated due to the franchisee's default, the franchisee has several financial obligations. These obligations are detailed in Section 19.3 and 19.4 of the Franchise Agreement and Section 4.5 of the Multi-Unit Development Agreement.
Specifically, the franchisee must pay all outstanding amounts owed to Bambu. In addition to settling outstanding debts, the franchisee is obligated to pay an amount equal to the monthly Royalty Fees that would have been due over the remaining term of the Franchise Agreement. This could represent a significant financial burden, as it requires paying future royalties upfront.
Beyond the monetary obligations, the franchisee is also responsible for de-identifying the Bambu shoppe, which means removing all branding and trademarks associated with Bambu. The franchisee must also return all confidential information to Bambu. Furthermore, the franchisee is subject to a covenant not to compete, which restricts their ability to engage in a similar business within a certain geographic area for a specified period. Bambu also retains the option to purchase the franchisee's Bambu shoppe or its assets upon termination.