If Bambu refuses to renew a franchise to convert it to a company-owned operation, what additional compensation, beyond inventory, supplies, etc., is Bambu obligated to provide according to the Hawaii Rider?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following paragraph is added to Section 19.4:
Section 482E-6(3) of the Hawaii Revised Statutes provides that upon termination or refusal to renew the Franchise, Bambu is obligated to compensate Franchisee for the fair market value, at the time of the termination or expiration of the Franchise, of Franchisee's inventory, supplies, equipment and furnishings purchased from Bambu or a Supplier designated by Bambu; provided that personalized materials which have no value to Bambu need not be compensated for. If Bambu refuses to renew a Franchise for the purpose of converting Franchisee's business to one owned and operated by Bambu, Bambu, in addition to the remedies provided above, shall compensate Franchisee for the loss of goodwill. Bambu may deduct from such compensation reasonable costs incurred in removing, transporting and disposing of Franchisee's inventory, supplies, equipment and furnishings pursuant to this requirement, and may offset from such compensation any monies due Bambu.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, specifically the Hawaii Rider to the Franchise Agreement, if Bambu refuses to renew a franchise to convert it to a company-owned operation, Bambu is obligated to compensate the franchisee for the loss of goodwill. This is in addition to compensating the franchisee for the fair market value of their inventory, supplies, equipment, and furnishings purchased from Bambu or a designated supplier.
This provision in the Hawaii Rider offers additional protection to franchisees in Hawaii compared to franchisees in other states. It ensures that if Bambu decides not to renew a franchise agreement to take over the location, the franchisee is compensated not only for the tangible assets but also for the intangible value of the business they have built, which is represented by its goodwill.
Bambu is allowed to deduct reasonable costs incurred in removing, transporting, and disposing of the franchisee's inventory, supplies, equipment, and furnishings from the compensation. Bambu can also offset any monies that the franchisee owes to Bambu from this compensation. This means that any outstanding debts or expenses related to the removal of assets will be factored into the final compensation amount the franchisee receives.