Can 7 Brew require certificates representing ownership interests in my 7 Brew franchise to bear a legend referring to the franchise agreement's restrictions?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
r indirectly, at least a twenty-five percent (25%) ownership interest in you, we may specify who among your ownership group must sign our Guaranty.
F. Your Form and Structure
As a corporation, limited liability company, or general, limited, or limited liability partnership (each, an "Entity"), you agree and represent that:
- (1) You have the authority to execute, deliver, and perform your obligations under this Agreement and all related agreements and are duly organized or formed and validly exist in good standing under the laws of the state of your incorporation or formation;
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, if you operate your franchise as a corporation, limited liability company, or partnership, 7 Brew can require that your organizational documents state that the franchise agreement restricts the issuance and transfer of any direct or indirect ownership interests.
Furthermore, 7 Brew can require that all certificates and other documents representing ownership interests in your franchise bear a legend referring to these restrictions. The specific wording of this legend can be prescribed by 7 Brew.
This provision ensures that any potential future owners are aware of the restrictions on ownership transfer imposed by the franchise agreement. This is a common practice in franchising to maintain control over who becomes a franchisee and to protect the brand's integrity. Prospective franchisees should carefully consider these restrictions and how they might affect their ability to transfer ownership in the future.