Can 7 Brew, its affiliates, or other restricted sources be designated or approved suppliers for 7 Brew franchisees?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
e to franchisees.
Despite these procedures, we have the right to limit the number of approved suppliers and distributors, designate sources you must use, and refuse your requests for any reason, including because we already have designated an exclusive source (which might be us or our affiliate) for a particular item or service or believe that doing so is in the 7 BREW Store network's best interest. If we approve any supplier or distributor you recommend, we have the right to authorize other 7 BREW Stores to buy or lease any Operating Assets, products, or services from that supplier or distributor without compensating you.
Revenue from Supply Chain
We and/or our affiliates have the right to derive revenue—in the form of promotional allowances, volume discounts, commissions, other discounts, performance payments, signing bonuses, rebates, marketing and advertising allowances, free products, and other economic benefits and payments—from suppliers that we designate, approve, or recommend for some or all 7 BREW Stores on account of those suppliers' prospective or actual dealings with your Store and other 7 BREW Stores (including affiliate-owned 7 BREW Stores). That revenue may or may not be related to services that we and our affiliates perform. All amounts received from suppliers, whether or not based on your or other franchisees' purchases from those suppliers, will be our and our affiliates' exclusive property, which we and our affiliates have the right to retain and use without restriction for any purposes we and our affiliates deem appropriate. Any products or services that we or our affiliates sell you directly may be sold to you at prices exceeding our and their costs.
Included in the other revenue reported in our audited financial statements is the $2,785,245 that we received from our franchisees during 2024 as reimbursement for technology subscription services, the costs of which we paid on our franchisees' behalf to certain unaffiliated third-party vendors (who make the services available directly to our franchisees). This represents 6.4% of our total 2024 revenue of $43,519,728. Otherwise, we did not receive any revenue during 2024 either from selling or leasing any items or services directly to our franchisees or from third-party suppliers on account of their business dealings with franchisees. Our affiliates CTAR, Inc.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–32)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew has the right to designate approved suppliers, which may include 7 Brew, its affiliates, and other restricted sources. 7 Brew can limit the number of approved suppliers, designate sources franchisees must use, and refuse a franchisee's requests for any reason, including designating an exclusive source, which could be 7 Brew or its affiliates.
To maintain the quality of 7 Brew store products and services and the franchise network's reputation, all operating assets and other products and services a store uses or sells must meet 7 Brew's minimum standards and specifications. These standards and specifications may impose minimum requirements for production, performance, safety, reputation, prices, quality, design, and appearance.
Currently, franchisees are not required to buy or lease all goods, services, supplies, fixtures, equipment, inventory, computer hardware and software, or real estate from 7 Brew (or its affiliates) or designated or approved suppliers. However, 7 Brew retains the right to designate other products and services that franchisees must buy only from 7 Brew, its affiliates, or designated or approved suppliers in the future. As described in Item 1, one of 7 Brew's affiliates is an approved supplier of the modular building for the store and is the designated supplier of the coffee equipment packages needed to operate the store. Another affiliate originates certain energy drinks the store will sell.
In 2024, 7 Brew's affiliates CTAR, Inc. and 7 Energy LLC received total revenue of $31,933,577 from selling modular buildings, coffee equipment, point-of-sale systems, card readers, and small-wares directly to franchisees or selling certain brands of energy drinks into the supply chain for resale to franchisees through independent distributors. Also in 2024, Brew Culture Buying Group LLC, another affiliate, received total cash payments of $6,456,179 from unaffiliated suppliers on account of those suppliers' sales of certain beverages, ingredients, packaging, and other items to franchisees.