Does Bambu require approval of franchisee transfers, and under what conditions can approval be withheld?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement or Multi-Unit Development Agreement | Summary | |
|---|---|---|---|
| (k) | "Transfer" by franchisee – defined | Section 17.1 of FA; Section 5.2 of MUDA | Includes transfer of franchise agreement or shoppe, any change in ownership of franchisee entity, or the transfer of the assets of the shoppe. |
| (l) | Franchisor approval of transfer by franchisee | Sections 17.3 and 17.8 of FA; Section 5.2 of MUDA | We have the right to approve all transfers, we may not unreasonably withhold our consent. We have the right to approve any public or private offering. |
| (m) | Conditions for franchisor approval of transfer | Sections 17.2 and 17.8 of FA; Sections 5.2 and 5.3 of MUDA | For the Franchise Agreement: The following conditions will apply: Timely notice to us, transferee qualifies, all amounts due are paid in full and any defaults cured, transferee completes training, transfer fee paid, then current contract signed (which may contain terms and conditions materially different from the original Franchise Agreement), franchisee signs general release, noncompetition covenant, if requested upgrade shoppe, transferor remains liable. Review of public or private offering materials. For the MUD Agreement: The following conditions will apply in addition to those listed above: Fee for each undeveloped Bambū shoppe paid. |
Source: Item 17 — (FDD pages 44–46)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, Bambu maintains the right to approve all franchise transfers, but the franchisor states that consent may not be unreasonably withheld. A 'transfer' includes the transfer of the franchise agreement or shoppe, any change in ownership of the franchisee entity, or the transfer of the assets of the shoppe.
Bambu outlines specific conditions that must be met for a transfer to be approved. These conditions include providing timely notice to Bambu, ensuring the transferee meets Bambu's qualifications, paying all outstanding amounts due to Bambu, and curing any existing defaults. Additionally, the transferee must complete the required training program, pay the transfer fee, and sign the then-current franchise agreement, which Bambu notes may contain terms and conditions materially different from the original agreement. The franchisee must also sign a general release and a non-competition covenant. Bambu may also request that the shoppe be upgraded. If the transfer involves a public or private offering, Bambu will review the offering materials.
For franchisees with a Multi-Unit Development Agreement, additional conditions apply beyond those listed for a standard Franchise Agreement. Specifically, the fee for each undeveloped Bambu shoppe must be paid as part of the transfer process. These stipulations ensure that Bambu maintains control over who operates its franchises and that certain standards and financial obligations are met during the transfer process. This is a fairly standard practice in franchising, as franchisors want to ensure that new owners are capable and committed to upholding the brand's standards.
Prospective franchisees should carefully consider these transfer conditions, as they could impact the ability to sell the franchise in the future. The requirement to sign a new franchise agreement with potentially different terms could affect the value of the business. The fees and upgrade requirements could also represent significant costs for both the transferor and transferee.