What are the 7 Brew franchisee's obligations regarding pre-opening purchases/leases (Item 9) and how do these relate to the estimated initial investment for building/improvements (Item 7)?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Note 9: This line-item estimates the funds needed to cover your other pre-opening expenses as well as initial expenses during the first 3 months of operation (other than the items identified separately in the table), including labor, supplies, rent, and utilities. These expenses do not include any draw or salary for you. We relied on Brew Culture, LLC's 7 BREW Store development and operating experience since it acquired the 7 BREW brand in January 2020, our franchising experience since 2021, and market comparables to compile this Additional Funds estimate.
Note 2: Real property costs vary considerably according to geographic location and immediate surrounding factors, such as traffic, property values, and demographics. (For example, rent costs are likely to be higher on the West Coast and East Coast and in dense major metropolitan areas and central business districts like Chicago.) The typical 7 BREW Store generally requires a lot ranging from 8,000 to 50,000 square feet on which the modular building—itself 510 square feet in size—will be placed. 7 BREW stores typically are placed on an out-parcel to a shopping center with street exposure in an urban or downtown location with heavy population, preferably with highway exposure or proximity.
Factors typically affecting your initial investment include your cost to negotiate the lease; local real estate market values; terms under which other locations have been leased; how the costs to renovate or develop the land, building, and other site improvements are allocated between landlord and tenant; interest costs; and the parties' negotiations. Lease terms are individually negotiated and may vary materially from one location or transaction to another.
- (c) Changes in Investment Requirements. The estimated expenses and investment requirements set forth in Items 6 and 7 of our Franchise Disclosure Document are subject to increase over time, and future Traditional 7 BREW Stores likely will involve greater initial investment and operating capital requirements than those stated in the Franchise Disclosure Document provided to you before you signed this Rider.
Except for security and utility deposits, no expenditure in the table is refundable (deposit refundability depends on landlord's and utility's practices).
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, Item 7 includes estimates for pre-opening expenses. Note 9 in Item 7 estimates funds to cover pre-opening expenses and initial expenses for the first 3 months, excluding items listed separately. These expenses include labor, supplies, rent, and utilities, but do not include any salary for the franchisee. Brew Culture, LLC's experience since acquiring the 7 Brew brand in January 2020, 7 Brew's franchising experience since 2021, and market comparables were used to compile this estimate.
Item 7 also states that real property costs can vary significantly based on location, traffic, property values, and demographics. 7 Brew stores typically require lots ranging from 8,000 to 50,000 square feet for the 510 square foot modular building. These stores are often located on out-parcels of shopping centers with street exposure in urban or downtown areas with heavy population, preferably with highway exposure or proximity. Factors affecting the initial investment include lease negotiation costs, local real estate market values, lease terms, allocation of renovation or development costs between landlord and tenant, interest costs, and negotiations between parties.
Item 22 indicates that the estimated expenses and investment requirements in Items 6 and 7 may increase over time, meaning future 7 Brew stores may involve greater initial investment and operating capital requirements than stated in the FDD. The franchisee must open all stores in compliance with the schedule. Item 7 also states that except for security and utility deposits, no expenditure in the table is refundable, and deposit refundability depends on the landlord's and utility's practices. Prospective franchisees should carefully review these figures with a business advisor before acquiring the franchise.