Can a 7 Brew franchisee operate as a trust without prior written consent?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
levy, attachment, or execution by your creditors or any financial institution. Any security interest that may be created in this Agreement by virtue of Section 9-408 of the Uniform Commercial Code is limited as described in Section 9-408(d) of the Uniform Commercial Code.
C. Conditions for Approval of Transfer
If you and your owners are in full compliance with this Agreement, then, subject to this Section 16's other provisions:
- (1) We will approve the transfer of a non-controlling ownership interest in you if the proposed transferee and its owners are of good moral character, have no ownership interest in and do not perform services for (and have no affiliates with an ownership interest in or performing services for) a Competitive Business, otherwise meet our then-applicable standards for non-controlling owners of 7 BREW Store franchisees, sign our then-current form of Guaranty and Assumption of Obligations or, if applicable, Owner's Undertaking of Non-Monetary Obligations, and pay us a One Thousand Dollar ($1,000) transfer fee. The term "controlling ownership interest" is defined in Section 21.M.
- (2) If the proposed transfer involves the franchise rights granted by this Agreement or a controlling ownership interest in you or in an Entity owning a controlling ownership
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for 7 Brew does not explicitly address whether a franchisee can operate their business through a trust without prior written consent. While the FDD details conditions for transferring ownership interests, including those involving controlling and non-controlling interests, it does not specifically mention trusts as a form of business organization that requires franchisor approval.
However, the 7 Brew FDD does state that if a proposed transfer involves the franchise rights or a controlling ownership interest, the franchisor will not unreasonably withhold approval if certain conditions are met. These conditions include the transferee meeting the franchisor's standards, signing a Guaranty and Assumption of Obligations, and paying a $1,000 transfer fee.
Since the FDD does not directly address operating as a trust, it is important for a prospective franchisee to seek clarification from 7 Brew regarding their policy on this matter. Specifically, the franchisee should inquire whether operating the franchise through a trust is considered a transfer of ownership or controlling interest that would require prior written consent. Understanding 7 Brew's stance on this issue is crucial for franchisees planning to structure their business in this way.