Can 7 Brew designate sources that franchisees must use?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
proved suppliers. In the future, we have the right to designate other products and services that you must buy only from us, our affiliates, or designated or approved suppliers. To maintain the quality of 7 BREW Store products and services and our franchise network's reputation, all Operating Assets and other products and services your Store uses or sells (besides those described above that you currently may obtain only from us, our affiliates, and/or approved and designated suppliers) must meet our minimum standards and specifications, which we issue and modify based on our, our affiliates', and our franchisees' experience in operating 7 BREW Stores. Standards and specifications may impose minimum requirements for production, performance, safety, reputation, prices, quality, design, and appearance. Our Operations Manual, other technical manuals, and written and on-line communications will identify our standards and specifications for you. When appropriate and authorized, you may provide those standards and specifications to suppliers if they agree to maintain confidentiality.
If you want to purchase or lease any Operating Assets, products, or services from a supplier or distributor we have not then approved (if we require you to buy or lease the product or service only from an approved supplier or distributor), then you must establish to our reasonable satisfaction that the quality and functionality of the item or service are equivalent to that of the item or service it replaces and that the supplier or distributor is, among other things, reputable, financially responsible, and adequately insured for product-liability claims. You must pay upon request any actual expenses we incur to determine whether or not the items, services, suppliers, or distributors meet our requirements and specifications. We will decide within a reasonable time (no more than 90 days) and have the right to condition supplier or distributor approval on requirements relating to product taste; quality; safety; third-party lab testing; prices; consistency; warranty; supply-chain reliability and integrity; financial stability; customer relations; frequency, economy, and efficiency of delivery; the benefits of concentrating purchases with limited suppliers;
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–32)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew has the right to designate sources that franchisees must use. To maintain the quality of 7 Brew store products and services and the franchise network's reputation, all operating assets and other products and services a store uses or sells must meet 7 Brew's minimum standards and specifications. These standards and specifications may impose minimum requirements for production, performance, safety, reputation, prices, quality, design, and appearance.
7 Brew can limit the number of approved suppliers and distributors, designate sources franchisees must use, and refuse requests for any reason, including because 7 Brew already has designated an exclusive source (which might be 7 Brew or its affiliate) for a particular item or service or believe that doing so is in the 7 Brew store network's best interest. Currently, one of 7 Brew's affiliates is an approved supplier of the modular building for the store and is the designated supplier of the coffee equipment packages needed to operate the store. Another affiliate originates certain energy drinks the store will sell.
Collectively, a franchisee's purchases and leases from 7 Brew or its affiliates, from designated or approved suppliers, or according to 7 Brew's standards and specifications represent about 100% of the franchisee's overall purchases and leases to establish and then to operate the store. 7 Brew restricts sources of items and services in many cases to protect trade secrets and other intellectual property, help assure quality and a reliable supply of products meeting their standards, achieve better purchase and delivery terms, control third-party use of the marks, and monitor the manufacture, packaging, processing, sale, and delivery of these items. This is a fairly common practice in franchising, allowing franchisors to maintain consistency and quality control across all locations. However, it also means franchisees have limited flexibility in sourcing products and services, potentially impacting their costs and profit margins.