Does the Area of Protection granted to a 7 Brew franchisee restrict 7 Brew or its affiliates from operating Non-Traditional 7 Brew stores within that Area of Protection?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
During the Term, we and our affiliates will not, except as provided in this Section 3.C and in Section 3.D below, own or operate, or allow another franchisee or licensee to own or operate, another Traditional 7 BREW Store that has its physical location within the geographical area described on Exhibit B (the "Area of Protection"). However, there are no restrictions whatsoever on our and our affiliates' activities with respect to Non-Traditional 7 BREW Stores physically located within the Area of Protection, including, but not limited to, our and our affiliates' right to own and operate and to grant others the right to own and operate such Non-Traditional 7 BREW Stores within the Area of Protection.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Area of Protection granted to a franchisee does not restrict 7 Brew or its affiliates from operating Non-Traditional 7 Brew stores within that area. The document states that there are no restrictions whatsoever on 7 Brew's and its affiliates' activities regarding Non-Traditional 7 Brew Stores physically located within the Area of Protection. This explicitly includes the right to own and operate, and to grant others the right to own and operate, such Non-Traditional 7 Brew Stores within the Area of Protection.
This means that while a franchisee is granted an Area of Protection for Traditional 7 Brew Stores, 7 Brew retains the right to establish Non-Traditional stores within that same area. A "traditional" 7 Brew store is defined as a freestanding or other facility that has at least one drive-thru window. Any 7 Brew Store that does not have at least one drive-thru window is considered to be a "non-traditional" 7 Brew Store.
For a prospective franchisee, this is a crucial point to consider. While the Area of Protection offers some exclusivity, it is limited to Traditional 7 Brew Stores. 7 Brew retains the right to introduce Non-Traditional stores, which could potentially compete with the franchisee's business within their protected area. This reservation of rights gives 7 Brew significant flexibility in developing its brand and market presence, but it also introduces a potential risk for franchisees who might face competition from other 7 Brew outlets within their territory.