Can 7 Brew require franchisees to use a designated insurance broker?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
(1) We may periodically designate and approve Brand Standards, manufacturers, suppliers, and/or distributors for the Operating Assets, products, and services we periodically authorize 7 BREW Stores to use or sell. You must purchase or lease all Operating Assets, products, and services you use or sell at the Store only according to Brand Standards and, if we require, only from manufacturers, suppliers, or distributors we designate or approve (which may include or be limited to us, certain of our affiliates, and/or other restricted sources). We and/or our affiliates may 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. That revenue may or may not be related to services 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 may retain and use without restriction
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, 7 Brew has the right to designate approved suppliers for products and services that franchisees use or sell. This extends to manufacturers, suppliers, and/or distributors for the Operating Assets, products, and services that 7 Brew authorizes its stores to use or sell. Franchisees are obligated to purchase or lease all Operating Assets, products, and services according to 7 Brew's Brand Standards and, if required, only from the manufacturers, suppliers, or distributors that 7 Brew designates or approves. This designation can include 7 Brew itself, its affiliates, or other restricted sources.
This policy means that 7 Brew franchisees may be required to use specific, approved suppliers for various aspects of their business, including potentially insurance. If 7 Brew requires franchisees to obtain insurance from a designated supplier, the franchisee must comply. 7 Brew may derive revenue from these designated suppliers through various means such as promotional allowances, volume discounts, commissions, and other economic benefits. These revenues are the exclusive property of 7 Brew and its affiliates, which they can retain and use without restriction.
While franchisees can propose alternative suppliers, 7 Brew has the right to refuse these requests for various reasons, including if they have already designated an exclusive source for a particular item or service or if they believe that doing so is in the 7 Brew network's best interests. 7 Brew may also limit the number of approved suppliers and distributors with which franchisees can deal. Therefore, while the FDD does not explicitly mention insurance brokers, the broad power 7 Brew retains over supplier approval suggests that they could mandate the use of a specific insurance broker if they deem it necessary for maintaining Brand Standards or the network's best interests.