The integration of graphene into devices necessitates large-scale growth and precise nanostructuring. Epitaxial growth of graphene on SiC surfaces offers a solution by enabling both simultaneous and targeted realization of quantum structures. We investigated the impact of local variations in the width and edge termination of armchair graphene nanoribbons (AGNRs) on quantum confinement effects using scanning tunneling microscopy and spectroscopy (STM, STS), along with density-functional tight-binding (DFTB) calculations. AGNRs were grown as an ensemble on refaceted sidewalls of SiC mesas with adjacent AGNRs separated by SiC(0001) terraces hosting a buffer layer seamlessly connected to the AGNRs. Energy band gaps measured by STS at the centers of ribbons of different widths align with theoretical expectations, indicating that hybridization of π-electrons with the SiC substrate mimics sharp electronic edges. However, regardless of the ribbon width, band gaps near the edges of AGNRs are significantly reduced. DFTB calculations successfully replicate this effect by considering the role of edge passivation, while strain or electric fields do not account for the observed effect. Unlike idealized nanoribbons with uniform hydrogen passivation, AGNRs on SiC sidewalls generate additional energy bands with non-pz character and nonuniform distribution across the nanoribbon. In AGNRs terminated with Si, these additional states occur at the conduction band edge and rapidly decay into the bulk of the ribbon. This agrees with our experimental findings, demonstrating that edge passivation is crucial in determining the local electronic properties of epitaxial nanoribbons.