Must 7 Brew notify a 7 Brew franchisee of a default before advising the franchisee's suppliers?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (5) We have the right (without liability) to consult with your suppliers about the status of your account with them and to advise your suppliers and others with whom you, we, our affiliates, and other franchisees deal that you are in default under any agreement with us or our affiliates (but only if we or our affiliate has notified you of such default).
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew has the right to consult with a franchisee's suppliers regarding the status of the franchisee's account. However, 7 Brew can only advise the franchisee's suppliers and other parties that the franchisee is in default if 7 Brew or its affiliate has already notified the franchisee of the default. This means 7 Brew must inform the franchisee of the default before communicating it to suppliers.
This stipulation protects the franchisee by ensuring they are aware of any default status before their suppliers are notified, allowing them an opportunity to rectify the situation or address any misunderstandings. It also maintains a level of transparency and communication between 7 Brew and its franchisees regarding their contractual obligations.
This is a fairly standard practice in franchising, as it balances the franchisor's need to protect the brand and system standards with the franchisee's right to be informed and manage their business. Franchisees should ensure they understand the conditions that constitute a default under their franchise agreement to avoid such situations.