Does the 7 Brew franchise agreement allow a franchisee to loan money to a Competitive Business?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (3) directly or indirectly loan any money or other thing of value, or guarantee any other person's loan, to any Competitive Business or any owner, director, officer, manager, or employee of any Competitive Business, wherever located or operating;
The term "Competitive Business," as used in this Agreement, means any (a) business that derives more than twenty-five percent (25%) of its revenue from selling coffee, or (b) business granting franchises or licenses to others to operate the type of business described in clause (a), other than a 7 BREW Store operated under a franchise agreement with us.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, franchisees are prohibited from directly or indirectly loaning money or any other thing of value to a Competitive Business. They are also restricted from guaranteeing any other person's loan to a Competitive Business, or to any owner, director, officer, manager, or employee of any Competitive Business. This restriction applies regardless of where the Competitive Business is located or operating.
A "Competitive Business" is defined as any business that derives more than 25% of its revenue from selling coffee, or any business that grants franchises or licenses to others to operate such a business, excluding other 7 Brew stores operating under a franchise agreement with 7 Brew. This definition is important for franchisees to understand, as it clarifies the scope of businesses to which they cannot provide financial support.
This provision aims to protect 7 Brew's market position and prevent franchisees from supporting competing businesses that could undermine the brand's success. It ensures that franchisees remain committed to the 7 Brew system and do not divert resources or support to rival coffee businesses. Franchisees must be aware of these restrictions to avoid violating the franchise agreement and potentially facing penalties or termination of their franchise.