Does a 7 Brew franchisee acquire any ownership interest in the Confidential Information?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
You will not acquire any interest in any Confidential Information, other than the right to use certain Confidential Information as we specify in operating the Store during the Term according to Brand Standards and this Agreement's other terms and conditions. Using any Confidential Information in another business would constitute an unfair method of competition with us and our affiliates, suppliers, and franchisees. You acknowledge and agree that Confidential Information is proprietary, includes our and our affiliates' trade secrets, and is disclosed to you only on the condition that you, your owners, and your employees agree, and you and they do agree:
- (1) not to use any Confidential Information in another business or capacity and at all times to keep Confidential Information absolutely confidential, both during and after the Term (afterward for as long as the information is not generally known in the coffee industry);
- (2) not to make unauthorized copies of any Confidential Information disclosed via electronic medium or in written or other tangible form;
- (3) to adopt and implement all reasonable procedures we periodically specify to prevent unauthorized use or disclosure of Confidential Information, including disclosing it only to Store personnel and others needing to know the Confidential Information in order to operate the Store and using confidentiality and nondisclosure agreements with those having access to Confidential Information. (We have the right to pre-approve the forms of agreements you use solely to ensure that you adequately protect Confidential Information and the competitiveness of 7 BREW Stores. Under no circumstances will we control the forms or terms of employment agreements you use with Store employees or otherwise be responsible for your labor relations or employment practices.); and
- (4) not to sell, trade, or otherwise profit in any way from the Confidential Information (including by selling or assigning any Consumer Data or related information or Data), except during the Term using methods we have approved.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, franchisees do not acquire any ownership interest in 7 Brew's Confidential Information. However, franchisees are granted the right to use specific Confidential Information as outlined in the franchise agreement for the duration of the term, provided they adhere to brand standards and the agreement's terms.
This means that while franchisees can utilize 7 Brew's proprietary information to operate their store, they cannot claim ownership or use it for any other business ventures. The FDD emphasizes that using Confidential Information in another business would be considered unfair competition against 7 Brew, its affiliates, suppliers, and other franchisees. Franchisees must keep the Confidential Information strictly confidential during and after the franchise term, as long as the information remains non-public within the coffee industry.
The agreement specifies that franchisees cannot make unauthorized copies of Confidential Information, and they must implement procedures to prevent unauthorized use or disclosure. These procedures include using confidentiality and nondisclosure agreements with store personnel who have access to the information. Franchisees are also prohibited from selling, trading, or profiting from the Confidential Information, except during the term and through approved methods. Upon termination or expiration of the agreement, franchisees must immediately cease using and return all copies of the Operations Manual and other confidential materials to 7 Brew.
This is a standard practice in franchising, as franchisors need to protect their intellectual property and trade secrets. The definition of Confidential Information is broad, including the Operations Manual, store layouts, marketing techniques, and customer data. Franchisees should carefully review the scope of Confidential Information and the restrictions on its use to fully understand their obligations under the franchise agreement.