For what purposes can 7 Brew and its affiliates use the revenue received from suppliers?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
We and/or our affiliates have the right to derive revenue—in the form of promotional allowances, volume discounts, commissions, other discounts, performance payments, signing bonuses, rebates, marketing and advertising allowances, free products, and other economic benefits and payments—from suppliers that we designate, approve, or recommend for some or all 7 BREW Stores on account of those suppliers' prospective or actual dealings with your Store and other 7 BREW Stores (including affiliate-owned 7 BREW Stores). That revenue may or may not be related to services that we and our affiliates perform. All amounts received from suppliers, whether or not based on your or other franchisees' purchases from those suppliers, will be our and our affiliates' exclusive property, which we and our affiliates have the right to retain and use without restriction for any purposes we and our affiliates deem appropriate. Any products or services that we or our affiliates sell you directly may be sold to you at prices exceeding our and their costs.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 27–32)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew and its affiliates have broad discretion over the revenue they receive from suppliers. This revenue can come in various forms such as promotional allowances, volume discounts, commissions, performance payments, signing bonuses, rebates, marketing and advertising allowances, and free products. These revenues may or may not be related to services that 7 Brew and its affiliates perform.
The FDD states that all amounts received from suppliers are the exclusive property of 7 Brew and its affiliates. This means 7 Brew has the right to retain and use these funds without any restrictions. The FDD explicitly says that 7 Brew and its affiliates can use this revenue for any purposes they deem appropriate.
This arrangement is typical in many franchise systems, where franchisors negotiate with suppliers on behalf of the entire network and may receive benefits for doing so. However, it's important for prospective franchisees to understand that they may not directly benefit from these supplier arrangements. The FDD also mentions that products or services sold directly to franchisees may be priced higher than 7 Brew's or its affiliates' costs. This is a potential area for franchisees to investigate further during their due diligence, to understand how these supplier revenues and pricing strategies may impact their profitability.