What indirect ownership interest do 7 Brew officers have in affiliates that do business with franchisees?

According to 7 Brew's 2025 Franchise Disclosure Document, officers of 7 Brew have an indirect ownership interest in two affiliates, 7 Energy LLC and CTAR, Inc., that conduct business with 7 Brew franchisees. This means that while the officers don't directly own these companies, they have some form of investment or ownership stake through another entity. These affiliates are involved in supplying modular buildings for the stores and certain energy drinks that the stores will sell.

This arrangement is important for prospective franchisees to understand because it highlights potential conflicts of interest. 7 Brew officers could benefit financially from franchisees' purchases from these affiliated suppliers. While the FDD does not specify the exact nature or extent of the indirect ownership, it is something a potential franchisee should investigate further during their due diligence.

It is common in franchising for franchisors or their officers to have ownership in supplier companies, as this can streamline the supply chain and ensure quality control. However, it is equally important that these relationships are transparent and that franchisees are not obligated to purchase from these affiliated suppliers at inflated prices or under unfavorable terms. Franchisees should inquire about the pricing and terms offered by these affiliated suppliers compared to other potential suppliers to ensure they are receiving fair market value.

Prospective franchisees should seek clarification from 7 Brew regarding the specifics of the indirect ownership interests, including the percentage of ownership, the financial benefits derived by the officers, and the process for ensuring fair pricing and quality control. Understanding these relationships is crucial for making an informed decision about investing in a 7 Brew franchise.