In Virginia, what pre-opening obligations must Bambu complete before receiving the development fee?

According to Bambu's 2025 Franchise Disclosure Document, the Virginia State Corporation Commission's Division of Securities and Retail Franchising mandates that Bambu must complete its pre-opening obligations under the Franchise Agreement for the franchisee's first Bambū shoppe before receiving the Development Fee. This requirement is specific to Virginia and is outlined in the Virginia Rider to the MUD Agreement. The reference to Section 1.3 indicates that the pre-opening obligations pertain to the initial franchise location specified in the agreement. This stipulation ensures that Bambu fulfills its initial responsibilities to the franchisee before being compensated for development rights.

This condition is in place to protect franchisees by ensuring that Bambu is committed to providing the necessary support and resources to get the first location up and running successfully. By deferring the payment of the Development Fee until these obligations are met, the franchisee can be more confident that Bambu will actively participate in the establishment of the first shoppe. This also aligns Bambu's interests with the franchisee's success, as Bambu is not fully compensated until it has fulfilled its pre-opening duties.

For a prospective franchisee in Virginia, this means that they will not be required to pay the Development Fee until Bambu has completed its pre-opening obligations for the first shoppe. It is important for the franchisee to understand what these pre-opening obligations entail, as outlined in the Franchise Agreement. This may include site selection assistance, training, providing operations manuals, and other forms of support necessary to prepare the shoppe for opening. Franchisees should carefully review the Franchise Agreement to fully understand Bambu's pre-opening obligations and ensure that these are fulfilled before the Development Fee is paid.

This deferral of payment provides a level of financial security for the franchisee, as they are not investing fully until Bambu has demonstrated its commitment to supporting the launch of the business. It is a condition imposed by the Virginia regulatory authorities to protect franchisees and ensure a fair franchising relationship. Franchisees should use this provision to their advantage by actively engaging with Bambu during the pre-opening phase and ensuring that all obligations are met to their satisfaction.