What management fee can 7 Brew charge if it assumes management of a store?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
If we assume the Store's management, all revenue from the Store's operation during our management period will (except as provided below) be kept in a separate account, and all Store expenses will be charged to that account. In addition to the fees and payments owed under this Agreement on account of the Store's operation, we may charge you a reasonable management fee, not to exceed ten percent (10%) of the Store's Gross Sales, plus any out-of-pocket expenses incurred in connection with the Store's management. We or our designee will have a duty to use only reasonable efforts and, if we or our designee is not grossly negligent and does not commit an act of willful misconduct, will not be liable to you or your owners for any debts, losses, lost or reduced profits, or obligations the Store incurs, or to any of your creditors for any supplies, products, or other assets or services the Store purchases, while we or our designee manages it. We may require you to sign our then-current form of management agreement, which will govern the terms of our management of the Store.
If we or our designee assumes the Store's management due to your abandonment or failure actively to operate the Store, we or our designee may retain all, and need not pay you or otherwise account to you for any, Gross Sales generated while we or our designee manages the Store
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, if 7 Brew assumes management of a store, they can charge a management fee. This fee is capped at ten percent (10%) of the store's Gross Sales during the period that 7 Brew manages the store. In addition to this percentage-based management fee, 7 Brew can also charge the franchisee for any out-of-pocket expenses they incur while managing the store. Gross Sales are defined as all revenue from the store's operation during the management period. All store expenses will be charged to a separate account.
This arrangement means that if a 7 Brew franchisee is unable to manage their store effectively, 7 Brew has the right to step in and manage the operations. However, the franchisee will still be responsible for covering the costs of this management, both through the percentage-based fee and any additional expenses incurred by 7 Brew. This could potentially eat into the franchisee's profits, especially if the store is not performing well.
It's important to note that 7 Brew has a duty to use only reasonable efforts in managing the store. The franchise agreement stipulates that 7 Brew or its designee will not be liable for any debts, losses, or reduced profits incurred by the store, provided they are not grossly negligent or commit an act of willful misconduct. Franchisees should carefully consider the implications of this clause and understand the circumstances under which 7 Brew might assume management of their store.