Under the Bambu franchise agreement, what constitutes a default under 'Other Agreements' that would be deemed a default under the franchise agreement?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
24.16 Cross-Default and Cross Termination Provisions.
- a. A default by Franchisee under this Agreement will be deemed a default of all agreements between Franchisee and/or any company(ies) affiliated with Franchisee, on the one hand, and Bambu and/or any company(ies) affiliated with Bambu, on the other hand (the "Other Agreements"). A default by Franchisee and/or any company(ies) affiliated with Franchisee under any of the Other Agreements will be deemed a default under this Agreement. A default by any guarantor(s) of this Agreement or of any of the Other Agreements will be deemed a default of this Agreement.
- b. If this Agreement is terminated as a result of a default by Franchisee, Bambu may, at its option, elect to terminate any or all of the Other Agreements. If any of the Other Agreements is terminated as a result of a default by Franchisee and/or any company(ies) affiliated with Franchisee, Bambu may, at its option, elect to terminate this Agreement. It is agreed that an incurable or uncured default under this Agreement or any of the Other Agreements will be grounds for termination of this Agreement and/or any and all of the Other Agreements without additional notice or opportunity to cure.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to the 2025 Bambu Franchise Disclosure Document, a default by a franchisee under any 'Other Agreement' is considered a default under the franchise agreement. These 'Other Agreements' refer to any agreements between the franchisee (or any company affiliated with the franchisee) and Bambu (or any company affiliated with Bambu). Additionally, a default by any guarantor of the Franchise Agreement or any of these 'Other Agreements' also constitutes a default under the Franchise Agreement.
This cross-default provision means that if a Bambu franchisee fails to meet their obligations in any agreement with Bambu or its affiliates, it triggers a default under the Franchise Agreement itself. This could include things like failing to pay suppliers, violating lease terms, or any other contractual breach. The FDD states that an incurable or uncured default under the Franchise Agreement or any of the Other Agreements will be grounds for termination of the Franchise Agreement and/or any and all of the Other Agreements without additional notice or opportunity to cure.
For a prospective Bambu franchisee, this clause creates a significant risk. Any misstep in related business dealings could jeopardize their entire franchise operation. It is crucial to carefully review all agreements with Bambu and its affiliates, ensuring full compliance to avoid triggering a cross-default. Franchisees should also ensure that any guarantors understand the extent of their obligations and the potential consequences of default.
This type of cross-default provision is not uncommon in franchising, as it protects the franchisor's brand and reputation by ensuring that franchisees maintain good standing in all their business dealings related to the franchise. However, the breadth of the clause—extending to 'any company(ies) affiliated with Franchisee'—warrants careful consideration and potentially legal review before signing the agreement.