Under what condition can a Bambu franchisee own securities in a Competitive Business?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Competitive Business" as used in this Agreement shall mean any business operating, or granting franchises or licenses to others to operate, a retail or wholesale business deriving more than 10 percent of its gross receipts from preparation of or sale of teas, fruit dessert drinks, coffee, or other products now or in the future offered or sold by Bambū shoppes. Notwithstanding the foregoing, Franchisee shall not be prohibited from owning securities in a Competitive Business if such securities are listed on a stock exchange or traded on the over-the-counter market and represent 5 percent or less of that class of securities issued and outstanding.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a franchisee is not completely prohibited from owning securities in a competitive business. A "Competitive Business" is defined as any business operating a retail or wholesale operation 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 in the future offered by Bambu.
However, the franchisee can own securities in a Competitive Business if those securities meet specific conditions. The securities must be listed on a stock exchange or traded on the over-the-counter market. Furthermore, the securities owned by the franchisee must represent 5% or less of the total outstanding securities of that class.
This allowance provides some flexibility for franchisees to invest in publicly traded companies, even if those companies might be considered competitive to Bambu, as long as the investment remains below a certain threshold. This clause aims to prevent franchisees from having a significant controlling interest in competing businesses while still allowing for minor investment opportunities.