Does the 7 Brew definition of 'transfer' include involuntary assignments?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
In this Agreement, the term "transfer" includes a voluntary, involuntary, direct, or indirect assignment, sale, gift, or other disposition, including the following events:
- (1) transfer of record or beneficial ownership of stock or any other ownership interest or the right to receive (directly or indirectly) all or a portion of the profits, losses, or any capital appreciation relating to the Store;
- (2) a merger, consolidation, or exchange of ownership interests, issuance of additional ownership interests or securities representing or potentially representing ownership interests, or a redemption of ownership interests;
- (3) any sale or exchange of voting interests or securities convertible to voting interests, or any management or other agreement granting the right (directly or indirectly) to exercise or control the exercise of any owner's voting rights or to control your (or an Entity with an ownership interest in you) or the Store's operations or affairs;
- (4) transfer in a divorce, insolvency, or Entity-dissolution proceeding or otherwise by operation of law;
- (5) transfer by will, declaration of or transfer in trust, or under the laws of intestate succession;
- (6) sale of the underlying real estate on which the Store's physical structure is located if such sale is completed alongside a sale of the Store (but only if you or one or more of your owners, directly or through another entity, hold title to that underlying real estate and only for the purposes of the right-of-first-refusal described in Section 16.G(2)); or
- (7) pledge of this Agreement (to someone other than us) or of an ownership interest in you or your owners as security or collateral, foreclosure upon or attachment or seizure of the Store (including its physical structure), or your transfer, surrender, or loss of the Store's possession, control, or management.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the term "transfer" is broadly defined and does include involuntary assignments. This definition is important for prospective franchisees to understand, as it outlines various scenarios that would be considered a transfer of ownership or control of the franchise.
The 7 Brew FDD specifies that the definition of "transfer" includes both voluntary and involuntary assignments. It lists several events that constitute a transfer, such as the transfer of stock ownership, mergers, consolidations, exchanges of ownership interests, and sales or exchanges of voting interests. This also extends to transfers occurring in situations like divorce, insolvency, or entity-dissolution proceedings, or otherwise by operation of law.
Furthermore, the definition encompasses transfers through wills, declarations of trust, or intestate succession, as well as the sale of the underlying real estate where the store is located, if sold alongside the store. The definition also includes the pledge of the Franchise Agreement or ownership interests as security or collateral, foreclosure, attachment, seizure of the store, or the franchisee's surrender or loss of possession, control, or management of the store. This comprehensive definition ensures that a wide array of changes in ownership or control are subject to the franchisor's approval and transfer conditions, protecting the integrity and consistency of the 7 Brew brand.