What ownership interest in a publicly-traded company is permitted without violating the competitive business restrictions in the 7 Brew franchise agreement?

According to 7 Brew's 2025 Franchise Disclosure Document, franchisees are permitted to own a limited amount of stock in publicly-traded companies that might otherwise be considered a competitive business. Specifically, the franchise agreement does not prohibit ownership of shares of a class of securities publicly-traded on a United States stock exchange, provided that such ownership represents less than three percent (3%) of the number of shares of that class of securities issued and outstanding. This allowance provides a carve-out to the competitive business restrictions.

This exception means that a 7 Brew franchisee can invest in publicly-traded companies that might be considered competitors, such as other coffee chains or beverage companies, without violating the franchise agreement, as long as their ownership stake remains below the 3% threshold. This is a fairly standard clause in franchise agreements, as it allows franchisees to diversify their investments without necessarily posing a competitive threat to the franchise system.

However, it's important to note that this exception applies only to publicly-traded companies. Any direct or indirect ownership interest in a private competitive business, regardless of the size of the interest, would still be a violation of the franchise agreement. Additionally, this exception does not allow a franchisee to perform services for a competitive business, regardless of whether it is publicly traded or not. Franchisees should carefully consider these restrictions when making investment decisions to ensure they remain in compliance with the 7 Brew franchise agreement.