Does Bambu permit franchisees to commence arbitration with a third party against Bambu?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
- a. Bambu and Franchisee agree that arbitration will be conducted on an individual basis only. Neither party shall commence any arbitration with a third party against the other, or join with any third party in any arbitration involving Bambu and Franchisee other than the Bambu Affiliates and the Franchisee Affiliates. Further, neither Bambu nor Franchisee shall attempt to consolidate or otherwise combine in any manner an arbitration proceeding involving Bambu and Franchisee with another arbitration of any kind, nor shall Bambu or Franchisee attempt to certify a class or participate as a party in a class action against the other.
- b. The foregoing notwithstanding, in the event Franchisee controls, is controlled by or is in active concert with another franchisee, distributor, or developer of Bambu, or there is a guarantor of some or all of the Franchisee's obligations to Bambu, then the joinder of those parties to any arbitration between Bambu and Franchisee shall be permitted, and in all events, the joinder of an owner, director, officer, manager, partner or other representative or agent of Franchisee shall be permitted.
- c. Franchisee agrees that no claims may be brought on its behalf or on behalf of any of the Franchisee Affiliates by any third party, including but not limited to any association representing Franchisee.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, franchisees are restricted from starting arbitration with a third party against Bambu. Specifically, arbitration must be conducted on an individual basis. Franchisees cannot initiate arbitration with a third party against Bambu or combine their arbitration with another one. They also cannot participate in a class action against Bambu. This limitation ensures that disputes are handled individually, preventing franchisees from joining forces in arbitration against the franchisor.
However, there are exceptions to this rule. If a franchisee is controlled by, controls, or is working with another Bambu franchisee, distributor, or developer, or if there is a guarantor of the franchisee's obligations to Bambu, those parties can be joined in an arbitration between Bambu and the franchisee. Additionally, owners, directors, officers, managers, partners, or other representatives or agents of the franchisee can be included in the arbitration. This allows for the inclusion of relevant parties who are closely tied to the franchisee's business operations or financial obligations.
Furthermore, the FDD states that franchisees cannot allow a third party, such as an association representing the franchisee, to bring claims on their behalf or on behalf of their affiliates. This provision aims to prevent external entities from initiating legal actions against Bambu on behalf of the franchisee network. In summary, while individual arbitration is permitted, Bambu restricts franchisees from engaging in collective or third-party-initiated arbitration, with specific exceptions for related parties and representatives.