What are the 7 Brew franchisee's obligations regarding site selection and acquisition/lease (Item 9), and how does the franchisor's territory granting (Item 12) impact this?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
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Development Rights Rider
You must agree to construct, develop, and operate at least 5 Traditional 7 BREW Stores within a specific territory (the "Territory"). The Territory is comprised collectively of a number of geographic coordinate points, including latitude and longitude—along with either a 1.5-mile or a 2-mile radius surrounding each coordinate point—within a city, cities, counties, or zip codes. The geographic coordinate points will be identified in an exhibit to the DRR before we and you sign it. The number of coordinate points within the Territory depends on the number of 7 BREW Stores you agree to develop, demographics, competitive businesses, and site availability.
We and you will determine the number of Stores you must develop, and the deadlines for development, to keep your development rights. We and you then will complete the schedule in the DRR before signing it. Under the DRR, we first must accept each new site you propose for each new 7 BREW Store. Our then-current standards for sites will apply. We have the right to terminate
the DRR if you do not satisfy your development obligations by the development deadlines (and fail to cure the default).
You alone will have the right to construct, develop, and operate Traditional 7 BREW Stores within the Territory. You will have no right under the DRR to construct, develop, and operate Non-Traditional 7 BREW Stores (although, as noted in Item 1, we often give franchisees a right-offirst-refusal for Non-Traditional 7 BREW Stores if they ask for it). Only Traditional 7 BREW Stores count toward your compliance with the development schedule. You may not develop or operate 7 BREW Stores (Traditional or Non-Traditional) outside the Territory.
We (and our affiliates) have the unrestricted right to construct, develop, and operate, and to allow other franchisees or licensees to construct, develop, and operate, Non-Traditional 7 BREW Stores physically located in the Territory. Our, our affiliate's, or another franchisee's or licensee's construction, development, and operation of a Non-Traditional 7 BREW Store physically located within the Territory will not count toward your compliance with the development schedule. Because of our rights with respect to Non-Traditional 7 BREW Stores, you will not receive an exclusive territory under the DRR. You may face competition from other franchisees, from outlets that we own, or from other channels of distribution or competitive brands that we control.
Except for your rights to Traditional 7 BREW Stores to be constructed and developed in the Territory, we and our affiliates have the right to engage, and to grant others the right to engage, in any other activities of any nature whatsoever within the Territory, including all of the activities in which we have the right to engage in the Franchise Agreement.
Despite the development schedule in the DRR, we have the right to delay your development and/or opening of additional 7 BREW Stores within the Territory if we believe, when you apply for another Store or after you (or your Approved Affiliate) have developed and constructed but not yet opened a particular Store, that you (or your Approved Affiliate) are not yet operationally, managerially, or otherwise prepared (no matter the reason) to develop, open, and/or operate the additional 7 BREW Store in full compliance with our standards and specifications. We have the right to delay additional development and/or a Store's opening for the time period we deem best if the delay will not in our reasonable opinion cause you to breach your development obligations under the development schedule (unless we are willing to extend the schedule to account for the delay).
Furthermore, if we delay your (or your Approved Affiliate's) progress in satisfying your development obligations under the development schedule due to our failure to timely accept a proposed Store site (which is acceptable based on the criteria described above), you provide written notice to us and give us at least 10 days to cure such delay, but we fail to cure such delay within that 10-day period, then we agree that you may unilaterally adjust the development schedule to add the number of days we delayed your progress to the opening deadline for each additional 7 BREW Store to be developed by you (or your Approved Affiliate) under the development schedule following such delay.
Except as described above, continuation of your territorial rights does not depend on your
achieving a certain sales volume, market penetration, or other contingency. We do not have the right to alter your Territory during the DRR's term.
Item 13 TRADEMARKS
You may use certain Marks in operating the Store.
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, franchisees bear the primary responsibility for site selection and acquisition. 7 Brew does not search for or select the site for the franchisee. Instead, the franchisee must locate, evaluate, and secure a site that 7 Brew accepts. 7 Brew provides its then-current criteria for Traditional 7 Brew Store sites to aid franchisees in this process, including factors like population density, visibility, traffic flow, competition, accessibility, size, and other physical and commercial characteristics. However, 7 Brew has no obligation to physically inspect the proposed sites. The franchisee must provide all requested information and materials, such as site reports, photographs, and digital recordings, to allow 7 Brew to assess the site. 7 Brew's acceptance of a site means only that it is not inconsistent with sites that 7 Brew regards as favorable or that have been successful in the past.
The territory granted to a 7 Brew franchisee is defined by geographic coordinate points with a 1.5-mile or 2-mile radius around each point, within specific cities, counties, or zip codes. The number of these coordinate points depends on the number of stores the franchisee agrees to develop, demographics, competition, and site availability. The franchisee has the exclusive right to develop Traditional 7 Brew Stores within this territory. However, 7 Brew retains the right to construct, develop, and operate Non-Traditional 7 Brew Stores within the same territory, either directly or through other franchisees or licensees. These Non-Traditional stores do not count towards the franchisee's development obligations.
This arrangement means that while a franchisee has exclusive rights to Traditional 7 Brew Stores within their territory, they may face competition from Non-Traditional 7 Brew Stores operated by 7 Brew or other franchisees. This significantly impacts the franchisee's site selection, as they must consider the potential for competition from these Non-Traditional outlets. Furthermore, 7 Brew retains significant control over the franchisee's development, including the right to delay the opening of additional stores if they believe the franchisee is not prepared to operate them in compliance with 7 Brew's standards. The franchisee may also not relocate the store without 7 Brew's approval and payment of a $5,000 relocation fee, plus reimbursement of 7 Brew's costs. These factors highlight the importance of careful site selection and ongoing compliance with 7 Brew's standards to maintain development rights and minimize potential conflicts.