Does the 7 Brew franchise agreement cover disputes related to agreements between the franchisee's owners and 7 Brew's affiliates?
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)
Based on the 2025 Franchise Disclosure Document, the 7 Brew franchise agreement outlines conditions regarding affiliated entities but does not explicitly address how disputes related to agreements between a franchisee's owners and 7 Brew's affiliates would be handled.
Specifically, the franchise agreement states that if a franchisee's owners establish a new legal entity to operate a 7 Brew store, that entity is considered an 'Approved Affiliate' if its ownership is identical to the franchisee's. If the ownership differs, 7 Brew's approval is required, and 7 Brew may refuse approval if the owners do not own and control at least 75% of the new entity and have voting and management control of the store. Each 7 Brew store operated by an Approved Affiliate requires a separate franchise agreement.
While the FDD details the conditions under which affiliates can operate and the need for separate agreements, it does not specify the process for resolving disputes between a franchisee's owners and 7 Brew's affiliates. A prospective franchisee should seek clarification from 7 Brew regarding dispute resolution processes involving affiliated entities to fully understand their rights and obligations.