Under what circumstances can a court sever a provision from the Bambu Franchise Agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event that any arbitrator or court of competent jurisdiction determines that any provision of this Agreement, including but not limited to any of the restrictive covenants contained in Article 21 hereof, are unenforceable as written for any reason, including for purposes of the restrictive covenants, reasons that the areas of restriction exceed the reasonable maximum time period, geographic area or scope, then the parties hereby request and authorize the arbitrator or court to "blue pencil" such provision so as to make it enforceable and to best carry out the intent of the parties, or to deem such provision severed from this Agreement if it cannot be so modified.
The holding, declaration or pronouncement shall not adversely affect any other provisions of this Agreement, which shall otherwise remain in full force and effect.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a court of competent jurisdiction or arbitrator may deem a provision severed from the Franchise Agreement if it determines that the provision is unenforceable as written. This includes situations where restrictive covenants, such as those in Article 21, are considered to exceed reasonable time periods, geographic areas, or scope. In such cases, the arbitrator or court is authorized to modify the provision to make it enforceable, while still carrying out the intent of both parties. However, if the provision cannot be modified to be enforceable, it can be severed from the agreement.
This severability clause ensures that the rest of the Franchise Agreement remains in full force and effect, even if one part is deemed invalid. This is a fairly standard provision in franchise agreements, designed to prevent the entire agreement from being nullified due to a single unenforceable clause. It also reflects an attempt to balance the interests of both Bambu and the franchisee by allowing for modifications to problematic clauses rather than outright invalidation.
For a prospective Bambu franchisee, this clause offers some protection. It means that if a specific term in the agreement is later found to be unfair or illegal, it can be removed or modified without jeopardizing the entire franchise relationship. However, franchisees should be aware that Bambu intends to fully enforce all provisions of the agreement to the maximum extent possible, as indicated by their disagreement with certain state-specific modifications included in the FDD as a condition of registration.