What is the definition of 'Operating Assets' in the context of a 7 Brew franchise sale?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
(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)
According to the 2025 7 Brew Franchise Disclosure Document, 7 Brew may designate and approve Brand Standards, manufacturers, suppliers, and/or distributors for the Operating Assets, products, and services they periodically authorize 7 Brew Stores to use or sell. Franchisees must purchase or lease all Operating Assets, products, and services they use or sell at the Store only according to Brand Standards and, if 7 Brew requires, only from manufacturers, suppliers, or distributors they designate or approve. These approved sources may include 7 Brew, their affiliates, and/or other restricted sources.
7 Brew and/or their affiliates may receive revenue from these designated suppliers in various forms such as promotional allowances, volume discounts, commissions, and other economic benefits. This revenue may or may not be related to services they perform. All amounts received from suppliers are the exclusive property of 7 Brew and their affiliates, which they can retain and use without restriction.
This arrangement means that a 7 Brew franchisee's choice of suppliers for essential operating assets, products, and services is limited to those approved by the franchisor. While this ensures brand consistency and potentially leverages the franchisor's buying power, it also means franchisees may not be able to seek out the lowest prices or preferred vendors on their own. The franchisee should also be aware that 7 Brew benefits financially from these supplier relationships.