How does the initial franchise fee for a Bambu franchise in Item 5 relate to the franchisee's obligations regarding ongoing royalty fees as described in Item 6?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
the furnishings or the equipment used in the shoppe. |
- The fees in Item 6 apply to all franchises, including those developed under a MUD Agreement.
- Fees and charges imposed by and payable to us. All of these fees and charges are nonrefundable. All fees and charges are payable by ACH transfer. Except as described in this Item, all fees and charges are uniformly imposed on franchisees currently acquiring a franchise. We reserve the right to modify these fees and charges including to resolve disputes, to address current business and economic conditions and under other circumstances.
- On or after the 1st day of each month, we will withdraw the monthly Royalty Fee for the current month. On or before July 15th, we will reconcile the Royalty Fee due based on your actual Net Revenues generated between January 1st and June 30th minus the monthly payments made for those months, and we will withdraw any additional amounts due no later than five days after completion of the reconciliation. On or before January 15th of the following year, we will reconcile the Royalty Fee due for the prior calendar year based on your actual Net Revenues generated by your Bambū shoppe in the prior calendar year minus all Royalty Fee amounts previously paid related to your prior year operations, and we will withdraw any additional amounts due no later than five days after completion of the reconciliation. If you are due a credit after the January 15th reconciliation, we will apply the overpayments to future monthly Royalty Fees until the overpayment is fully applied. If you close your Bambū shoppe during a relocation you must pay us the $800 per month Royalty Fee during the closure period.
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, Item 6 indicates that the fees outlined apply to all franchises, including those developed under a MUD Agreement. The initial franchise fee is a one-time payment made to Bambu, while the royalty fee is an ongoing obligation.
The FDD states that on or after the 1st day of each month, Bambu will withdraw the monthly Royalty Fee for the current month. Additionally, on or before July 15th, Bambu will reconcile the Royalty Fee due based on the franchisee's actual Net Revenues generated between January 1st and June 30th, minus the monthly payments made for those months. Any additional amounts due will be withdrawn no later than five days after completion of the reconciliation. A similar reconciliation process occurs on or before January 15th of the following year for the prior calendar year's Net Revenues. If a franchisee is due a credit after the January 15th reconciliation, Bambu will apply the overpayments to future monthly Royalty Fees until the overpayment is fully applied.
If a Bambu franchisee closes their shoppe during a relocation, they must still pay the $800 per month Royalty Fee during the closure period. In this case, for reconciliation purposes, the franchisee is deemed to have generated monthly Net Revenues equal to $800 divided by 3.5 percent (prorated for any partial months). The Royalty Fee is based on the franchisee's POS System sales records. Bambu also reserves the right to modify these fees and charges including to resolve disputes, to address current business and economic conditions and under other circumstances.
In summary, while the initial franchise fee grants the franchisee the right to operate a Bambu franchise, the ongoing royalty fees are tied to the franchisee's revenue and are a continuous obligation throughout the franchise term. The initial fee does not offset or reduce the royalty fee obligations; they are separate and distinct payments.