What happens if a 7 Brew franchisee is not in substantial compliance with the DRR and fails to cure?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisees must sign our then-current form of Franchise Agreement for each additional 7 BREW Store they develop under the DRR. While that form may differ substantially and materially year to year from the first Franchise Agreement they sign for their first 7 BREW Store to be developed (our current version of Franchise Agreement is disclosed in this disclosure document), the initial franchise fee will not change for the 2nd and each subsequent 7 BREW Store you commit to develop under the DRR. In addition, we will modify our then-current form of franchise agreement for each new 7 BREW Store to include the same terms that you negotiated with us and that appear in any amendment to your first Franchise Agreement, unless you (and your Approved Affiliates) are not then in substantial compliance (subject to any applicable cure opportunity) with the DRR, the first Franchise Agreement, and all other franchise agreements then in effect. If you (and your Approved Affiliates) are not then in substantial compliance with the DRR, the first Franchise Agreement, and all other franchise agreements then in effect and fail to cure such failure within any applicable opportunity to cure, then the terms of our then-current form of franchise agreement will not be modified as provided above to include the terms we previously negotiated with you.
Source: Item 1 — THE FRANCHISOR, AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 9–12)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, a franchisee's failure to maintain substantial compliance with the Development Rights Rider (DRR), the initial Franchise Agreement, and all other franchise agreements in effect can have significant consequences regarding the terms of future franchise agreements. Specifically, this applies when a franchisee seeks to develop additional 7 Brew stores under the DRR.
If a 7 Brew franchisee (or their Approved Affiliates) is not in substantial compliance with the DRR, the initial Franchise Agreement, and all other franchise agreements in effect, and they fail to correct this non-compliance within the provided cure period, the terms of the then-current franchise agreement will not be modified to include previously negotiated terms. This means that any specific terms that the franchisee had successfully negotiated for their initial 7 Brew store will not automatically carry over to subsequent franchise agreements for additional stores.
In essence, failing to maintain substantial compliance and cure any deficiencies means that the franchisee loses the benefit of having their previously negotiated terms included in future franchise agreements. This could result in less favorable terms for the new franchise agreements, potentially impacting the franchisee's operational flexibility and financial obligations for the additional 7 Brew stores they plan to develop.