What constitutes a failure to comply with the 7 Brew franchise agreement regarding the development, opening, and operation of the store?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
, we and our affiliates have the right, without any restrictions whatsoever, to (a) construct, develop, and operate, and to grant others the right to construct, develop, and operate, Traditional 7 BREW Stores physically located in the Territory (except within the Area of Protection surrounding each of your Traditional 7 BREW Stores) and (b) continue to engage, and to grant others the right to engage, in any other activities we (and our affiliates) desire within the Territory.
YOU ACKNOWLEDGE AND AGREE THAT TIME IS OF THE ESSENCE UNDER THIS RIDER, AND YOUR RIGHTS UNDER THIS RIDER ARE SUBJECT TO TERMINATION, AS PROVIDED IN THIS RIDER, IF YOU DO NOT COMPLY STRICTLY WITH THE DEVELOPMENT OBLIGATIONS PROVIDED IN THE SCHEDULE AND FAIL TO CURE SUCH NON-COMPLIANCE WITHIN NINETY (90) DAYS AFTER RECEIVING WRITTEN NOTICE FROM US. WE MAY ENFORCE THIS RIDER STRICTLY.
3. Development Obligations.
- (a) Approved Affiliates. To maintain your rights under this Rider, you (and/or Approved Affiliates) must by the deadlines specified in the Schedule construct, develop, and have open and operating within the Territory the agreed-upon minimum number of Traditional 7 BREW Stores. If your owners establish a new legal entity to operate one or more of the Traditional 7 BREW Stores to be developed pursuant to this Rider and that new legal entity's ownership is completely identical to your ownership, that legal entity automatically will be considered an "Approved Affiliate" without further action. However, if the new legal entity's ownership is not completely identical to your ownership, you first must seek our approval for that new entity to develop and operate the proposed Traditional 7 BREW Store as an Approved Affiliate. We may refuse any such request if you and/or your owners do not (a) own and control at least seventy-five percent (75%) of the new entity's ownership interests and (b) have the authority to exercise voting and management control of the Store proposed to be owned by the new entity.
- (b) Form of Franchise Agreement. You (and/or your Approved Affiliates) will operate each Traditional 7 BREW Store under a separate franchise agreement with us.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, several actions can be considered a failure to comply with the franchise agreement, specifically concerning the development, opening, and operation of a 7 Brew store. A franchisee must construct, develop, and operate the agreed-upon minimum number of Traditional 7 Brew Stores within the territory by the deadlines outlined in the Schedule. Failure to meet these deadlines constitutes a breach of the development obligations. The franchisee must operate each 7 Brew store continuously throughout the Rider's term in full compliance with its franchise agreement.
If a franchisee fails to meet any development obligation under the Schedule, 7 Brew will provide written notice, allowing ninety (90) days to cure the failure. Failure to cure within this period allows 7 Brew to terminate the Rider. Additionally, 7 Brew can terminate the Rider if the franchisee fails to meet any other obligation under the Rider that is not subject to a cure period. If the initial franchise agreement or any other franchise agreement between 7 Brew and the franchisee is terminated, 7 Brew can also terminate the Rider.
Furthermore, if 7 Brew delivers a formal written notice of default under the initial franchise agreement or another franchise agreement and the franchisee fails to cure the default within the required timeframe, 7 Brew has grounds for termination. It is important to note that 'time is of the essence' under the Rider, meaning strict compliance with the development obligations is critical. 7 Brew reserves the right to enforce the Rider strictly. Prospective franchisees should carefully review the Schedule and all terms of the Rider to understand their obligations and the potential consequences of non-compliance.