If Bambu refuses to renew a franchise in Hawaii to convert it to a company-owned operation, what additional compensation is Bambu obligated to provide?
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, a Hawaii Rider to the Franchise Agreement specifies compensation terms if Bambu refuses to renew a franchise in Hawaii to convert it to a company-owned operation. In such a scenario, Bambu is obligated to compensate the franchisee for the loss of goodwill, 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 compensation for inventory, supplies, equipment, and furnishings excludes personalized materials that have no value to Bambu. Bambu is allowed to deduct reasonable costs incurred in removing, transporting, and disposing of the franchisee's inventory, supplies, equipment, and furnishings. Additionally, Bambu can offset from the compensation any monies owed to them by the franchisee.
This provision is specific to Hawaii due to the state's franchise laws, as indicated by the Hawaii Rider. Prospective franchisees in Hawaii should pay close attention to these terms, as they provide additional protection compared to franchisees in other states. The inclusion of compensation for goodwill is a significant benefit, as it acknowledges the value of the business's reputation and customer base built by the franchisee.