What is considered a controlling ownership interest in an Entity with an ownership interest in a 7 Brew franchise?
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.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the definition of "controlling ownership interest" is found in Section 21.M of the agreement. When transferring ownership, 7 Brew distinguishes between controlling and non-controlling interests. Specifically, if a transfer involves the franchise rights or a controlling ownership interest in the franchisee or an entity owning a controlling interest in the franchisee, 7 Brew will assess the proposed transfer based on certain conditions.
For a non-controlling ownership interest transfer to be approved, the proposed transferee must be of good moral character, not have an ownership interest in or perform services for a Competitive Business, meet 7 Brew's standards for non-controlling owners, sign a Guaranty and Assumption of Obligations or Owner's Undertaking of Non-Monetary Obligations, and pay a $1,000 transfer fee.
It is important for potential franchisees to understand these conditions, as transferring ownership interests, especially controlling ones, requires franchisor approval and adherence to specific criteria. Prospective franchisees should refer to Section 21.M of the franchise agreement for the precise definition of "controlling ownership interest" to ensure compliance with 7 Brew's transfer requirements.