What representations and warranties regarding ownership must the 7 Brew franchisee make if 7 Brew exercises its right of first refusal?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
If we do not exercise our right-of-first-refusal, the title-holder may complete the sale to the proposed buyer on the original offer's terms. If the title-holder does not complete the sale to the proposed buyer within sixty (60) days after we notify the title-holder that we do not intend to exercise our right-of-first-refusal, or if there is a material change in the sale's terms (which the title-holder agrees to tell us promptly), we will have an additional right-of-first-refusal during the thirty (30) days following either expiration of the sixty (60) day period or our receipt of notice of the material change(s) in the sale's terms.
We have the unrestricted right to assign this right-of-first-refusal to a third party (including an affiliate), which then will have the rights described in this Section 16.G(2). (All references in this Section 16.G(2) to "we" or "us" include our assignee if we have exercised our right to assign this right-of-first-refusal to a third party.)
The title-holder agrees to sign and deliver to us at the Effective Date, for public recordation and other legitimate business purposes, a joinder signature page to this Agreement and any other document we specify so that public notice may be given of the rights set forth in this Section 16.G(2) and we may provide any other information required by the laws of the state in which the Store's underlying real estate is located. We have the right to record such documents at our expense at any time on or after the Effective Date.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the excerpt provided does not specify the exact representations and warranties a 7 Brew franchisee must make regarding ownership if 7 Brew exercises its right of first refusal. The document does outline 7 Brew's right of first refusal if a franchisee decides to sell their business.
Specifically, if a franchisee (referred to as the "title-holder") receives an offer to purchase their 7 Brew store, they must first offer the same terms to 7 Brew. 7 Brew can then choose to either accept the offer and purchase the store themselves or decline. If 7 Brew declines, the franchisee is free to sell to the original proposed buyer. However, there are time limits and conditions on this right.
If the sale to the proposed buyer isn't completed within 60 days after 7 Brew declines, or if the terms of the sale materially change, 7 Brew has another 30-day right of first refusal. 7 Brew also has the right to assign its right of first refusal to another party. The title-holder must sign a joinder signature page to the franchise agreement to provide public notice of 7 Brew's rights.
To fully understand the obligations, a prospective 7 Brew franchisee should ask the franchisor for a complete list of representations and warranties they must make concerning ownership and any potential sale of the franchise, particularly when 7 Brew exercises its right of first refusal. This information is crucial for making an informed decision about investing in a 7 Brew franchise.