During the term of affiliation, can an Associate of a Bambu franchise have a controlling interest in a Competitive Business?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
hisee the Confidential Information only to the extent necessary for such employees, agents or representatives to carry out their intended function.
-
- Noncompetition Covenant. Associate covenants and agrees that, during the term of his or her Affiliation, except in conjunction with Franchisee's Bambū shoppe in a manner authorized by Bambu and Franchisee, Associate shall not, either directly or indirectly through any member of Associate's immediate family, separate business entity, or otherwise:
- (a) have any direct or indirect controlling interest as a disclosed or beneficial owner in a Competitive Business, defined below;
- (b) perform services as a director, officer, manager, employee, consultant, representative, agent or otherwise for a Competitive Business;
- (c) divert or attempt to divert any business related to Bambu, Franchisee or any other franchisee of Bambu to any Competitive Business by direct inducement or otherwise; or
- (d) divert or attempt to divert the employment of any employee or representative of Bambu, Franchisee or any other franchisee of Bambu to any Competitive Business by any direct inducement or otherwise.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, an Associate is restricted from having a controlling interest in a Competitive Business during their affiliation with a Bambu franchisee. Specifically, an Associate cannot have a direct or indirect controlling interest in a Competitive Business, which is defined as any business deriving more than 10% of its gross receipts from the preparation or sale of teas, fruit dessert drinks, coffee, or other products offered by Bambu. This restriction is in place to protect Bambu's market position and confidential information.
This non-compete provision ensures that Associates, who gain knowledge of Bambu's operational methods and confidential information, do not use that knowledge to benefit a competing business during their term of affiliation. The restriction extends not only to direct ownership but also to indirect interests held through family members or separate business entities. This is a fairly standard practice in franchising to prevent conflicts of interest and protect the franchisor's brand and business model.
However, there is an exception to this restriction. An Associate is allowed to own securities in a Competitive Business if those securities are listed on a stock exchange or traded over-the-counter, provided that the securities represent 5% or less of the outstanding securities of that class. This exception allows for minor investments in publicly traded companies that might be considered competitors, without violating the non-compete agreement. This clause provides a bit of flexibility for Associates while still safeguarding Bambu's primary business interests.