After the 7 Brew franchise is terminated or expires, what activities are prohibited regarding competitive businesses?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| transferee (and each owner) qualifies | ||
| (including, if transferee is an existing | ||
| franchisee, transferee is in substantial | ||
| operational compliance under all other | ||
| franchise agreements for 7 BREW Stores) | ||
| and is not restricted by another agreement | ||
| from moving forward with the transfer; you | ||
| have paid us and our affiliates all amounts | ||
| due, have submitted all reports, and are not | ||
| then in breach; transferee and its owners and | ||
| affiliates are not in a competitive business; | ||
| training completed; transfer fee paid; | ||
| transferee may occupy Store’s site for | ||
| expected franchise term; transferee (at our | ||
| option) assumes your Franchise Agreement or | ||
| signs our then-current form of franchise | ||
| agreement and other documents for unexpired | ||
| portion of your original franchise term (then- | ||
| current form may have materially different | ||
| terms, except that your original Royalty, | ||
| Brand Fund contribution, and Tech Fee levels | ||
| and Area of Protection definition will remain | ||
| the same for unexpired portion of your | ||
| original franchise term and, if we previously | ||
| agreed to amend your Franchise Agreement | ||
| before you signed it, we will incorporate such | ||
| amendments into the then-current form of | ||
| franchise agreement that is signed by the | ||
| transferee); transferee agrees to repair and | ||
| upgrade; you (and transferring owners) sign | ||
| general release (if applicable state law | ||
| allows); we determine that sales terms and | ||
| financing will not adversely affect Store’s | ||
| operation post-transfer; you subordinate | ||
| amounts due to you; and you stop using | ||
| Marks and our other intellectual property | ||
| (also see (r) below). | ||
| n. Franchisor’s right of first refusal to acquire franchisee’s business | 16.G of Franchise Agreement | We have the right to match any offer for your |
| Store (including its physical structure) or | ||
| ownership interest in you or entity that | ||
| controls you. | ||
| We have the right to match any offer for | ||
| underlying real estate on which Store’s | ||
| physical structure is located if you or your | ||
| owner directly or indirectly holds title to that | ||
| underlying real estate and wishes to sell that | ||
| real estate as part of any sale or transfer with | ||
| respect to which we have the right-of-first- | ||
| refusal described above. | ||
| o. Franchisor’s option to | Not Applicable | We do not have this right. We do not have this right. |
| purchase franchisee’s | ||
| business | ||
| p. Death or disability of | 16.E of Franchise | Must transfer to approved party (which may |
| franchisee | Agreement | |
| include immediate family member) within 6 | ||
| months. | ||
| q. Non-competition covenants during the term of the franchise | 12 of Franchise Agreement | No owning interest in, performing services |
| for, or loaning money or guaranteeing loan to | ||
| competitive business, wherever located or | ||
| operating; no diverting business to | ||
| competitive business; and no solicitation of | ||
| other franchisees for other commercial | ||
| purposes. “Competitive Business” means any | ||
| (a) business deriving more than 25% of its | ||
| revenue from selling coffee, or (b) business | ||
| granting franchises or licenses to others to | ||
| operate the type of businesses described in | ||
| clause(a). | ||
| r. Non-competition covenants after the franchise is terminated or expires | 19.E of Franchise Agreement | For 2 years after franchise term, no owning |
| interest in or performing services for | ||
| Competitive Business located or operating at | ||
| Store’s site, within 3 miles of former Store | ||
| site, or within 3 miles of physical location of | ||
| another 7 BREW Store (same restrictions | ||
| apply after transfer). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 54–61)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, after the franchise term ends, franchisees face specific restrictions regarding competitive businesses. For a period of two years, former franchisees are prohibited from owning an interest in or performing services for a Competitive Business.
This non-compete clause applies if the Competitive Business is located or operating at the former 7 Brew Store's site. It also extends to any location within three miles of the former store site or within three miles of any other existing 7 Brew store. These restrictions also apply after a transfer of the franchise.
This means that a franchisee who leaves the 7 Brew system cannot immediately open a competing coffee shop or work for a competitor near their old location or other 7 Brew locations. This is a fairly standard practice in franchising to protect the brand and prevent franchisees from using proprietary knowledge gained during their time with the franchise to unfairly compete against the system.