What specific obligations to third parties does the Bambu franchisee's failure to pay trigger a potential termination?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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- The following subsection is added to Section 19.2:
- c. Failure to Pay Third Party Obligations. Franchisee fails to pay all taxes and other obligations owed to third parties related to the operation of the Bambū shoppe.
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- The last sentence of Section 19.2 is deleted in its entirety and the following provision is substituted in its place:
Notwithstanding the foregoing, if the breach is curable, but is of a nature which cannot be reasonably cured within 60 days, and Franchisee has commenced and is continuing to make good faith efforts to cure the breach, Franchisee shall be given an additional period of time to cure the breach, but in no case more than 75 days following Bambu's notice of default, unless Franchisee and Bambu execute a separate, written agreement to further extend the cure period.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a franchisee's failure to pay obligations to third parties can trigger a potential termination of the franchise agreement. Specifically, if the franchisee fails to pay all taxes and other obligations owed to third parties related to the operation of the Bambu shop, it can be considered a breach of the agreement.
This means that if a Bambu franchisee does not meet their financial responsibilities to entities like tax authorities, suppliers, or landlords, Bambu has grounds to terminate the franchise agreement. This clause is significant because it broadens the scope of what constitutes a default beyond just non-payment to the franchisor itself. It holds franchisees accountable for maintaining good financial standing with all parties involved in the business.
However, the FDD also states that if the breach is curable but cannot be reasonably cured within 60 days, and the franchisee is making good faith efforts to cure the breach, the franchisee will be given an additional period of time to cure the breach, but in no case more than 75 days following Bambu's notice of default, unless Franchisee and Bambu execute a separate, written agreement to further extend the cure period. This provides a limited window for franchisees to rectify the situation and avoid termination, provided they demonstrate a commitment to resolving the outstanding debts.
Prospective franchisees should be aware of this provision and understand the importance of managing their financial obligations diligently. Failure to do so could result in the loss of their franchise. It would be prudent for potential franchisees to seek clarification from Bambu regarding what specific types of third-party obligations are most likely to trigger a termination and what documentation would be required to demonstrate 'good faith efforts' to cure a breach.