What is the duration of the 7 Brew covenant not to compete?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
You, each owner, and your and their Immediate Families will each be bound by these competitive restrictions for two (2) years beginning on the effective date of this Agreement's termination or expiration. However, if a restricted person does not begin to comply with these competitive restrictions immediately, the two (2)-year restrictive period for that non-compliant person will not start to run until the date on which that person begins to comply with the competitive restrictions (whether or not due to the entry of a court order enforcing this provision). The running of the two (2)-year restrictive period for a restricted person will be suspended whenever that restricted person breaches this Section and will resume when that person resumes compliance. The restrictive period also will be tolled automatically during the pendency of a proceeding in which either party challenges or seeks to enforce these competitive restrictions. These restrictions also apply after a permitted transfer under Section 16 above. You (and your owners) expressly acknowledge that you (and they) possess skills and abilities of a general nature and have other opportunities for exploiting those skills. Consequently, our enforcing the covenants made in this Section 19.E will not deprive you (and them) of personal goodwill or the ability to earn a living. The terms of Section 12.B of this Agreement also apply to the competitive restrictions described in this Section 19.E.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, franchisees and their owners are subject to a covenant not to compete for a period of two years. This restriction begins on the effective date of the termination or expiration of the Franchise Agreement. The non-compete prevents them from engaging in or having an interest in a Competitive Business within a specific geographic area.
Specifically, the franchisee is restricted from having an ownership interest or performing services for a 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. This restriction does not prevent the ownership of less than three percent of shares in a publicly-traded company.
It's important to note that the two-year restrictive period may be extended if a restricted person does not immediately comply with the competitive restrictions. In such cases, the period will not begin until the person starts complying. Additionally, the running of the restrictive period will be suspended during any breach of the covenant and will resume only upon compliance. The period is also automatically paused during any legal proceedings challenging or seeking to enforce these restrictions. These restrictions remain in effect even after a permitted transfer of the franchise.