For 7 Brew, what happens to the obligations of both the franchisor and franchisee that expressly survive the expiration or termination of the Franchise Agreement?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
C. Confidential Information
Upon termination or expiration of this Agreement, you and your owners must immediately cease using any of our Confidential Information in any business or otherwise and return to us all copies of the Operations Manual and any other confidential materials to which we gave you access. You may not sell, trade, or otherwise profit in any way from any Consumer Data or other Confidential Information at any time after expiration or termination of this Agreement.
D. Notification to Customers
Upon termination or expiration of this Agreement, we have the right to contact (at our expense) previous, current, and prospective customers to inform them that a 7 BREW Store no longer will operate at the Store's location. We also have the right to inform them of other nearby 7 BREW Stores. Exercising these rights will not constitute interference with your contractual or business relationships with those customers.
E. Covenant Not to Compete
Upon our termination of this Agreement in compliance with its terms, your termination of this Agreement without cause, or expiration of this Agreement (without the grant of a successor franchise), you and your owners agree that neither you, they, nor any member of your or their Immediate Families will:
- (1) have any direct or indirect, controlling or non-controlling interest as an owner whether of record, beneficial, or otherwise—in any Competitive Business located or operating:
- a. at the Store's site; or
- b. within three (3) miles of the former Store site; or
- c. within three (3) miles of the physical location of another 7 BREW Store in operation or under construction on the later of the effective date of termination or expiration or the date on which the restricted person begins to comply with this Section 19.E,
provided that this restriction does not prohibit ownership of shares of a class of securities publicly-traded on a United States stock exchange and representing less than three percent (3%) of the number of shares of that class of securities issued and outstanding; or
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to the 2025 FDD, several obligations for both 7 Brew and the franchisee survive the termination or expiration of the Franchise Agreement. The franchisee must immediately cease using 7 Brew's confidential information and return all copies of the Operations Manual and other confidential materials. The franchisee is prohibited from selling, trading, or profiting from consumer data or other confidential information after the agreement ends. This protects 7 Brew's proprietary information and customer relationships.
7 Brew has the right to contact previous, current, and prospective customers to inform them that a 7 Brew store will no longer operate at the former location and to direct them to other nearby 7 Brew locations. This ensures that customers remain within the 7 Brew system.
Additionally, the franchisee agrees to a covenant not to compete, which prevents them and their immediate family from having a direct or indirect interest in a Competitive Business. This restriction applies to businesses located at the former store site or within three miles of the former store site or any other 7 Brew store in operation or under construction. This non-compete clause is triggered upon 7 Brew's termination of the agreement in compliance with its terms, the franchisee's termination without cause, or the expiration of the agreement without a successor franchise being granted. However, the restriction does not prohibit ownership of less than 3% of a class of securities publicly traded on a U.S. stock exchange.