Does the 7 Brew franchise agreement confer rights or remedies to third parties?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
G. Franchisor is an intended third-party beneficiary under the provisions set forth above with independent rights to enforce them, and neither Landlord nor Tenant may alter or limit any of those provisions without Franchisor's prior written approval.
If we do not exercise our right-of-first-refusal, the title-holder may complete the sale to the proposed buyer on the original offer's terms. If the title-holder does not complete the sale to the proposed buyer within sixty (60) days after we notify the title-holder that we do not intend to exercise our right-of-first-refusal, or if there is a material change in the sale's terms (which the title-holder agrees to tell us promptly), we will have an additional right-of-first-refusal during the thirty (30) days following either expiration of the sixty (60) day period or our receipt of notice of the material change(s) in the sale's terms.
We have the unrestricted right to assign this right-of-first-refusal to a third party (including an affiliate), which then will have the rights described in this Section 16.G(2). (All references in this Section 16.G(2) to "we" or "us" include our assignee if we have exercised our right to assign this right-of-first-refusal to a third party.)
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 does confer rights to third parties. Specifically, 7 Brew is designated as a third-party beneficiary in certain lease-related provisions, granting them independent rights to enforce those provisions. This arrangement ensures that 7 Brew has the ability to protect its interests related to the leased premises where a franchise operates.
This means that 7 Brew, as the franchisor, has specific rights related to the property lease even though they are not a direct party to the lease agreement between the franchisee (tenant) and the landlord. These rights allow 7 Brew to step in and maintain control over the location, which is critical for maintaining brand consistency and operational standards. For instance, if a franchisee defaults on their lease, 7 Brew has the right to take possession of the premises to cure any defaults and ensure the 7 Brew store continues to operate.
The agreement also specifies that neither the landlord nor the tenant (franchisee) can alter or limit these provisions without 7 Brew's prior written approval. This stipulation further solidifies 7 Brew's position and control, preventing franchisees and landlords from making lease changes that could negatively impact the franchise or the 7 Brew system. This is a notable benefit for 7 Brew, as it provides an additional layer of security and control over franchise locations, safeguarding their brand and operational standards.
Furthermore, 7 Brew retains the right to assign its right-of-first-refusal to a third party, including an affiliate, in the event of a sale of the property. This allows 7 Brew to maintain influence over who ultimately controls the real estate where a 7 Brew store is located, even if the original franchisee or landlord decides to sell. This right ensures that 7 Brew can strategically manage its real estate interests and maintain brand consistency across all locations.