Who is the 7 Brew Franchise Agreement binding upon, besides 7 Brew and the franchisee?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
3. Development Obligations.
- (a) Approved Affiliates. To maintain your rights under this Rider, you (and/or Approved Affiliates) must by the deadlines specified in the Schedule construct, develop, and have open and operating within the Territory the agreed-upon minimum number of Traditional 7 BREW Stores. If your owners establish a new legal entity to operate one or more of the Traditional 7 BREW Stores to be developed pursuant to this Rider and that new legal entity's ownership is completely identical to your ownership, that legal entity automatically will be considered an "Approved Affiliate" without further action. However, if the new legal entity's ownership is not completely identical to your ownership, you first must seek our approval for that new entity to develop and operate the proposed Traditional 7 BREW Store as an Approved Affiliate. We may refuse any such request if you and/or your owners do not (a) own and control at least seventy-five percent (75%) of the new entity's ownership interests and (b) have the authority to exercise voting and management control of the Store proposed to be owned by the new entity.
- (b) Form of Franchise Agreement. You (and/or your Approved Affiliates) will operate each Traditional 7 BREW Store under a separate franchise agreement with us. The franchise agreement (and related documents, including Guaranty and Assumption of Obligations) that you and your owners (or your Approved Affiliate and its owners) must sign for each Traditional 7 BREW Store constructed and developed pursuant to this Rider will be our then-current form of franchise agreement (and related documents, including Guaranty and Assumption of Obligations),
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, the franchise agreement is also binding upon the franchisee's owners and Approved Affiliates. Specifically, if the franchisee's owners establish a new legal entity to operate one or more 7 Brew stores, and the ownership of that entity is completely identical to the franchisee's ownership, that entity will automatically be considered an "Approved Affiliate."
However, if the new legal entity's ownership is not completely identical, the franchisee must seek 7 Brew's approval for the new entity to operate a store as an Approved Affiliate. 7 Brew may refuse this request if the franchisee and/or their owners do not own and control at least 75% of the new entity's ownership interests and have the authority to exercise voting and management control of the store.
Furthermore, the franchise agreement and related documents, including the Guaranty and Assumption of Obligations, must be signed by the franchisee and their owners, or the Approved Affiliate and its owners, for each 7 Brew store constructed and developed. This ensures that the obligations and responsibilities outlined in the franchise agreement are legally binding on these parties as well.