What constitutes an 'Owner' according to the 7 Brew franchise agreement?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
ious, current, and prospective customers to inform them that a 7 BREW Store no longer will operate at the Store's location. We also have the right to inform them of other nearby 7 BREW Stores. Exercising these rights will not constitute interference with your contractual or business relationships with those customers.
E. Covenant Not to Compete
Upon our termination of this Agreement in compliance with its terms, your termination of this Agreement without cause, or expiration of this Agreement (without the grant of a successor franchise), you and your owners agree that neither you, they, nor any member of your or their Immediate Families will:
- (1) have any direct or indirect, controlling or non-controlling interest as an owner whether of record, beneficial, or otherwise—in any Competitive Business located or operating:
- a. at the Store's site; or
- b. within three (3) miles of the former Store site; or
- c. within three (3) miles of the physical location of another 7 BREW Store in operation or under construction on the later of the effective date of termination or expiration or the date on which the restricted person begins to comply with this Section 19.E,
provided that this restriction does not prohibit ownership of shares of a class of securities publicly-traded on a United States stock exchange and representing less than three percent (3%) of the number of shares of that class of securities issued and outstanding; or
- (2) perform services as a director, officer, manager, employee, consultant, representative, or agent for a Competitive Business located or operating:
- a. at the Store's site; or
- b. within three (3) miles of the former Store site; or
c.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, an 'owner' is subject to certain restrictions, particularly concerning competitive businesses. The franchise agreement specifies that neither the franchisee nor their owners, nor any member of their Immediate Families, can have any direct or indirect interest in a Competitive Business. This includes any controlling or non-controlling interest, whether it is of record or beneficial. However, there is an exception for ownership of shares of a class of securities publicly-traded on a United States stock exchange, provided that the shares represent less than three percent of the total shares issued and outstanding.
This restriction applies upon termination of the agreement by 7 Brew, termination by the franchisee without cause, or expiration of the agreement without renewal. The restriction extends to any Competitive Business located at the Store's site, within three miles of the former Store site, or within three miles of another 7 Brew Store in operation or under construction. A 'Competitive Business' is defined as any business that derives more than 25% of its revenue from selling coffee or any business granting franchises or licenses to others to operate such a business, excluding a 7 Brew Store operated under a franchise agreement with 7 Brew.
Furthermore, the agreement specifies that 'Immediate Family' includes the named individual, their spouse or domestic partner, and all children of the named individual or their spouse or domestic partner. This broad definition ensures that the non-compete obligations extend to close family members, preventing them from engaging in competitive activities that could undermine the 7 Brew franchise. Prospective franchisees should carefully consider these restrictions and ensure that they and their immediate family members are not involved in any conflicting business interests before entering into a franchise agreement with 7 Brew.