Does the non-competition clause in the Bambu franchise agreement apply to the franchisee's officers and directors?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
effort and money which went into its compilation, but from the usage of the same by all the franchisees of Bambu using the Marks and Bambū system. Therefore, other than the Bambū shoppe licensed herein or authorized by separate agreement with Bambu, neither Franchisee nor any of Franchisee's officers, directors, shareholders, members, managers or partners, nor any member of his or their immediate families, shall during the term of this Agreement:
- a. have any direct or indirect controlling interest as a disclosed or beneficial owner in a "Competitive Business" as defined below;
- b. perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business; or
- c. divert or attempt to divert any business related to, or any customer or account of the Bambū shoppe, Bambu's business or any other Bambū franchisee's business, by direct inducement or otherwise, or divert or attempt to divert the employment of any employee of Bambu or another franchisee licensed by Bambu to use the Marks and Bambū system, to any Competitive Business by any direct inducement or otherwise.
The term "Competitive Business" as used in this Agreement shall mean any business operating, or granting franchises or licenses to others to operate, a retail or wholesale business deriving more than 10 percent of its gross receipts from preparation of or sale of teas, fruit dessert drinks, coffee, or other products now or in the future offered or sold by Bambū shoppes. Notwithstanding the foregoing, Franchisee shall not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5 percent or less of that class of securities issued and outstanding.
The term "immediate family" as used in this Article 21 shall mean and include any spouse, domestic partner, children, parents or siblings.
21.2 Post-Termination Covenant Not to Compete. Upon termination or expiration of this Agreement for any reason, Franchisee and its officers, directors, shareholders, members, managers and/or partners agree that, for a period of two years commencing on the effective date of termination or expiration, or the date on which Franchisee ceases to conduct business, whichever is later, neither Franchisee nor its officers, directors, shareholders, members, managers and/or partners shall have any direct or indirect interest (through a member of any immediate family of Franchisee or its owners or otherwise) as a disclosed or beneficial owner, investor, partner, director, officer, member, employee, consultant, representative or agent or in any other capacity in any Competitive Business, defined in Section 21.1 above, located or operating within a 10 mile radius of the Franchised Location, within 10 miles of any other franchised Bambū shoppe or, within 10 miles of any company or affiliate owned Bambū shoppe. If Franchisee or any of the affiliated parties breaches this Section, the two-year period shall start on the date that such person is enjoined from competing or stops competing, whichever is later. Franchisee and its officers, directors, shareholders,
members, managers and/or partners acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting such skills.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, the non-competition clause does apply to the franchisee's officers and directors. During the term of the agreement, neither the franchisee nor any of the franchisee's officers, directors, shareholders, members, managers, or partners, including their immediate families, can have a direct or indirect controlling interest in a Competitive Business, perform services for a Competitive Business, or divert business or employees from Bambu. A Competitive Business is defined as one deriving more than 10 percent of its gross receipts from the sale of teas, fruit dessert drinks, coffee, or other products offered by Bambu.
Post-termination, for a period of two years, this restriction extends to the franchisee, its officers, directors, shareholders, members, managers, and/or partners. They are prohibited from having any direct or indirect interest in a Competitive Business within a 10-mile radius of the franchised location, any other franchised Bambu shoppe, or any company-owned Bambu shoppe. The term "immediate family" includes any spouse, domestic partner, children, parents, or siblings.
Bambu also reserves the right to require the franchisee to ensure that its officers, directors, partners, shareholders, members, managers, and employees with access to confidential information, along with their immediate family members, execute a Nondisclosure and Noncompetition Agreement. This agreement would contain restrictions approved by Bambu, reinforcing the covenants already in place. Franchisees must provide Bambu with copies of these signed agreements. This comprehensive approach ensures that multiple parties associated with the franchisee are bound by non-competition and confidentiality obligations, protecting Bambu's business interests and confidential information.