Who is prohibited from having an interest in a Competitive Business within the restricted radius after termination of a Bambu franchise?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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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. Consequently, enforcement of the covenants made in this Section will not deprive them of their personal goodwill or ability to earn a living.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, after the termination or expiration of the Franchise Agreement, both the franchisee and certain affiliated parties are restricted from having an interest in a Competitive Business. This restriction applies for two years, beginning either on the termination/expiration date or when the franchisee ceases business operations, whichever occurs later.
The parties subject to this covenant include the franchisee, along with their officers, directors, shareholders, members, managers, and partners. The restriction extends to any direct or indirect interest, whether disclosed or beneficial, held by these individuals or their immediate family members. This encompasses roles such as owner, investor, partner, director, officer, member, employee, consultant, representative, or agent in a Competitive Business.
A Competitive Business is defined as any business that derives more than 10% of its gross receipts from the preparation or sale of teas, fruit dessert drinks, coffee, or other products currently or potentially offered by Bambu shops. The restricted area covers a 10-mile radius around the franchised location, any other franchised Bambu shop, or any company-owned Bambu shop. If a breach occurs, the two-year period restarts from the date the person is legally stopped from competing or voluntarily ceases competition, whichever is later.
This post-termination covenant not to compete is a standard practice in franchising to protect the brand and its franchisees from unfair competition. Prospective Bambu franchisees should carefully consider the implications of this restriction, particularly if they have existing business interests or plan to engage in similar ventures after leaving the Bambu system. It is important to understand the definition of a Competitive Business and the geographic scope of the restriction to avoid potential legal issues.