What are the consequences if a 7 Brew franchisee does not use ure Franchise, LLC when required?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
You acknowledge the importance of operating the Store in full compliance with this Agreement and Brand Standards. You further acknowledge that your deviation from any contractual requirement, including any Brand Standard, is a violation of this Agreement and will trigger incalculable administrative and management costs for us to address the violation (separate and apart from any damages your violation might cause to the Franchise System, our business opportunities, or the goodwill associated with the Marks).
D. Approved Products, Services, and Suppliers
(1) We may periodically designate and approve Brand Standards, manufacturers, suppliers, and/or distributors for the Operating Assets, products, and services we periodically authorize 7 BREW Stores to use or sell. You must purchase or lease all Operating Assets, products, and services you use or sell at the Store only according to Brand Standards and, if we require, only from manufacturers, suppliers, or distributors we designate or approve (which may include or be limited to us, certain of our affiliates, and/or other restricted sources). We and/or our affiliates may 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. That revenue may or may not be related to services 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 may retain and use without restriction
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, 7 Brew franchisees are required to adhere to specific standards and utilize approved suppliers for operational assets, products, and services. Failure to comply with these requirements constitutes a violation of the Franchise Agreement.
The FDD specifies that franchisees must purchase or lease all operating assets, products, and services according to Brand Standards, and if required, only from designated or approved manufacturers, suppliers, or distributors. These approved sources may include 7 Brew itself, its affiliates, or other restricted sources. 7 Brew and its affiliates may receive revenue in various forms, such as promotional allowances, volume discounts, and commissions, from these designated suppliers based on the dealings with the franchisee's store and other 7 Brew locations. This revenue is the exclusive property of 7 Brew and its affiliates.
The document emphasizes the importance of operating the store in full compliance with the Franchise Agreement and Brand Standards. Any deviation from these contractual requirements, including Brand Standards, is considered a violation of the agreement. Such violations can lead to incalculable administrative and management costs for 7 Brew to address, separate from any damages the violation might cause to the franchise system, business opportunities, or goodwill associated with the brand. While the FDD outlines the potential for significant costs and a breach of contract, it does not explicitly detail the specific penalties or remedies 7 Brew may pursue. A prospective franchisee should seek clarification from 7 Brew regarding the specific consequences of failing to use approved suppliers.