How does the 7 Brew franchisor's assistance with site selection (Item 11) relate to the franchisee's estimated initial investment for rent and security deposit (Item 7)?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
IAL INVESTMENT**
| Type of expenditure | Amount | Method of payment | When due | To whom payment is to be made | |---|---|---|---|---| | Development Fee and First Initial Franchise Fee (minimum 5-Store commitment) (Note 1) | $75,000 | Lump sum | Upon signing first Franchise Agreement and DRR | Us | | Rent and Security Deposit (Note 2) | $5,000 to $20,000 | Monthly | As incurred | Third Party (your landlord) | | Building / Build-Out Costs (Note 2) | $318,500 to $600,000 | Lump sum or financed | As incurred | Our Affiliate or Third Parties (your landlord and/or contractor) | | Site Development Costs (Note 2) | $200,000 to $800,000 | Lump sum or financed | As incurred | Third Parties (your landlord and/or contractor) | | Architectural and Engineering Fees | $10,000 to $60,000 | Lump sum or financed | As incurred | Third Parties (your landlord and/or contractor) | | Store Equipment, Fixtures, and Furniture (Note 3) | $185,000 to $250,000 | Lump sum or financed | As incurred | Approved Suppliers and Our Affiliate |
| Type of expenditure | Amount | Method of payment | When due | To whom payment is to be made | |
|---|---|---|---|---|---|
| Signs | $10,000 to $40,000 | Lump sum or financed | As incurred | Approved Suppliers | |
| Point-of-Sale | $15,000 to | Lump sum or | As incurred | Approved | |
| System (Note 3a) | $25,000 | financed | Suppliers | ||
| Opening Inventory, Supplies, and Uniforms (Note 4) | $15,000 to $50,000 | Lump sum | Before opening | Approved Suppliers | |
| Business and Operating Permits (Note 5) | $2,500 to $25,000 | As incurred | As incurred | Licensing Authorities | |
| Initial Training Travel & Living Expenses (Note 6) | $10,000 to $75,000 | As incurred | As incurred | Employees / Vendors | |
| Utilities | $500 to $2,500 | As incurred | As incurred | Licensing Authorities | |
| Insurance (Note 7) | $2,500 to $6,000 | As incurred | As incurred | Insurance Company / Broker | |
| Marketing Start-Up Expense (Note 8) | $20,000 to $75,000 | Lump sum | Before and after opening | Third Parties and Approved Suppliers | |
| Additional Funds—3 Months (Note 9) | $25,000 to $75,000 | As incurred | Monthly and as incurred | Third Parties and Employees |
| Type of expenditure | Amount | Method of payment | When due | To whom payment is to be made | |---|---|---|---|---| | Total (Note 10) | $894,000 to $2,178,500 | | | | Except for security and utility deposits, no expenditure in the table is refundable (deposit refundability depends on landlord's and utility's practices).
Explanatory Notes to Table:
Note 1: The initial franchise fee for your first 7 BREW Store is $35,000. The initial franchise fee for the second and each subsequent Store you commit to develop is $25,000. You must commit to develop a minimum five 7 BREW Stores when you sign the first Franchise Agreement and the DRR. The total investment necessary to begin operation with those development rights is $894,000 to $2,178,500. Other than payment of the development fee, no separate initial investment is required when you sign the DRR. The development fee equals the full $35,000 initial franchise fee for the first Store covered by the Franchise Agreement to which the DRR is attached, plus $10,000 for each additional Store you commit to develop. This $10,000 per-Store payment is not a deposit toward future initial franchise fees.
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;
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the franchisor offers assistance in site selection, which directly impacts the franchisee's initial investment, particularly concerning rent and security deposits. 7 Brew will review potential store sites identified by the franchisee within their development territory, but the franchisee is responsible for locating, evaluating, selecting, and securing the site. The franchisor provides its criteria for traditional 7 Brew store sites, including factors like population density, visibility, traffic flow, and accessibility, to aid in the site selection process. The franchisor has the right to reject any site that does not meet their criteria. After the site is accepted and secured, it will be identified as the store's address in the Franchise Agreement. The franchisor does not own locations for lease to franchisees.
The estimated initial investment for rent and security deposits ranges from $5,000 to $20,000, payable to the landlord as incurred. This figure represents an estimate for one month's rent plus one month's security deposit. The FDD notes that real property costs can vary significantly based on geographic location, traffic, property values, and demographics. For example, rent costs are likely to be higher on the West Coast and East Coast, as well as in major metropolitan areas like Chicago. The typical 7 Brew store requires a lot ranging from 8,000 to 50,000 square feet, where the 510 square foot modular building will be placed. 7 Brew stores are typically 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 influencing the initial investment include the cost to negotiate the lease, local real estate market values, terms under which other locations have been leased, and how the costs to renovate or develop the land are allocated between the landlord and tenant. Lease terms are individually negotiated and can vary materially from one location to another. The franchisee's rent will likely be based on development costs and reflect a rate of return on the landlord's initial investment. Commercial leases are typically "triple net" leases, requiring the franchisee to pay rent, taxes, insurance, maintenance, repairs, and other costs associated with the property. The FDD estimates annual rent to be between $30,000 and $120,000. Franchisees have the option to lease or buy the real estate, but the table does not include potential real estate purchase costs.