What compliance standards must a transferee meet to be approved for a 7 Brew franchise transfer?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
levy, attachment, or execution by your creditors or any financial institution. Any security interest that may be created in this Agreement by virtue of Section 9-408 of the Uniform Commercial Code is limited as described in Section 9-408(d) of the Uniform Commercial Code.
C. Conditions for Approval of Transfer
If you and your owners are in full compliance with this Agreement, then, subject to this Section 16's other provisions:
- (1) We will approve the transfer of a non-controlling ownership interest in you if the proposed transferee and its owners are of good moral character, have no ownership interest in and do not perform services for (and have no affiliates with an ownership interest in or performing services for) a Competitive Business, otherwise meet our then-applicable standards for non-controlling owners of 7 BREW Store franchisees, sign our then-current form of Guaranty and Assumption of Obligations or, if applicable, Owner's Undertaking of Non-Monetary Obligations, and pay us a One Thousand Dollar ($1,000) transfer fee. The term "controlling ownership interest" is defined in Section 21.M.
- (2) If the proposed transfer involves the franchise rights granted by this Agreement or a controlling ownership interest in you or in an Entity owning a controlling ownership interest in you, or is one of a series of transfers (regardless of the timeframe over which those transfers take place) in the aggregate transferring the franchise rights granted by this Agreement or a controlling ownership interest in you or in an Entity owning a controlling ownership interest in you, then we will not
unreasonably withhold our approval of a proposed transfer meeting all of the following conditions:
- a. on both the date you send us the transfer request and the transfer's proposed effective date: (i) the transferee and its direct and indirect owners have the necessary business experience, aptitude, and financial resources to operate the Store; (ii) the transferee otherwise is qualified under our then-existing standards for the approval of new franchisees or of existing franchisees interested in acquiring additional franchises (including the transferee and its affiliates are in substantial operational compliance, at the time of the application, under all other franchise agreements for 7 BREW Stores to which they then are parties with us); and (iii) the transferee and its owners are not restricted by another agreement (whether or not with us) from purchasing the Store or the ownership interest in you or the Entity that owns a controlling ownership interest in you;
- b.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the franchisor will not unreasonably withhold approval of a proposed transfer if certain conditions are met. These conditions pertain to the transferee's qualifications, the franchisee's compliance, and other operational and financial factors.
Specifically, the transferee and its owners must demonstrate the necessary business experience, aptitude, and financial resources to operate the 7 Brew store. The transferee must also meet 7 Brew's then-existing standards for new franchisees or existing franchisees looking to acquire additional franchises. This includes being in substantial operational compliance under any other 7 Brew franchise agreements they may have. Additionally, the transferee and its owners must not be restricted by any other agreement from purchasing the store or ownership interest.
Furthermore, the franchisee (the one transferring the franchise) must be in full compliance with the franchise agreement. This means that on the date of the transfer request and the proposed effective date, all required royalties, brand fund contributions, tech fees, and other amounts owed to 7 Brew and its affiliates must be paid. All required reports and statements must be submitted, and the franchisee must not be in breach of any provision of the franchise agreement or any other agreement with 7 Brew or its affiliates related to the store. The transferee and its owners also cannot operate, have an ownership interest in, or perform services for a competitive business. Finally, the transferee's management personnel, if different from the current management, must satisfactorily complete 7 Brew's then-current initial training, and the transferee must have the right to occupy the store's site for the expected franchise term.