How many defaults can a Bambu franchisee have and still be eligible for renewal?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement or Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| (a) | Length of the franchise term | Section 18.1 of Franchise Agreement ("FA"); Section 4.1 of Multi-Unit Development Agreement ("MUDA") | 10 years for the Franchise Agreement. For the MUD Agreement, the term extends until the earlier of the date that you sign the Franchise Agreement for the final Bambū shoppe to be developed under the MUD Agreement or the deadline in the development schedule for signing that Franchise Agreement. |
| (b) | Renewal or extension of the term | Sections 18.3 and 18.4 of FA | If you meet certain criteria, you may acquire successor franchise rights for the term stated in the then current Franchise Agreement. |
| (c) | Requirements for franchisee to renew or extend | Section 18.3 of FA | Provide notice to us, no more than 3 defaults, remodel shoppe, attend additional training, pay fee, sign new agreement and a Successor Franchise Rider in the form attached as Exhibit E containing a release. If you seek to acquire successor franchise rights, you may be required to sign a contract with materially different terms and conditions than your original contract. |
Source: Item 17 — (FDD pages 44–46)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a franchisee can have no more than 3 defaults to be eligible for renewal. To renew their franchise agreement, Bambu franchisees must provide notice to the company, remodel their shoppe, attend additional training, pay a fee, and sign a new agreement and a Successor Franchise Rider that includes a release.
It is important to note that if a franchisee seeks to acquire successor franchise rights, they may be required to sign a contract with materially different terms and conditions than their original contract. This means that while a franchisee may be eligible for renewal with 3 or fewer defaults, the terms of the new agreement could be significantly different and potentially less favorable than the original agreement.
This condition is relatively common in franchising, as franchisors often update their franchise agreements to reflect changes in the market, legal requirements, or the franchisor's business model. Prospective franchisees should carefully consider the implications of potentially needing to agree to new terms and conditions upon renewal, and should seek legal counsel to review the new agreement before signing.