Does 7 Brew have any restrictions on assigning the franchise contract?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| l. Franchisor approval of | 16.B of Franchise | We must approve all transfers; no transfer |
| transfer by franchisee | Agreement and 9 of DRR | |
| without our prior written consent. | ||
| Your development rights under DRR are not | ||
| assignablewithout our prior written consent. | ||
| m. Conditions for franchisor | 16.C of Franchise | We will approve transfer of non-controlling |
| approval of transfer | Agreement | |
| ownership interest in you if transferee (and | ||
| each owner) qualifies and meets our then- | ||
| applicable standards for non-controlling | ||
| owners, is not (and has no affiliate) in a | ||
| competitive business, signs our then-current | ||
| form of guaranty (or, if applicable, Owner’s | ||
| Undertaking of Non-Monetary Obligations), | ||
| and pays transfer fee. | ||
| When there is transfer of franchise rights or | ||
| controlling ownership interest, we will not | ||
| unreasonably withhold our approval if: | ||
| transferee (and each owner) qualifies | ||
| (including, if transferee is an existing | ||
| franchisee, transferee is in substantial | ||
| operational compliance under all other | ||
| franchise agreements for 7 BREW Stores) | ||
| and is not restricted by another agreement | ||
| from moving forward with the transfer; you | ||
| have paid us and our affiliates all amounts | ||
| due, have submitted all reports, and are not | ||
| then in breach; transferee and its owners and | ||
| affiliates are not in a competitive business; | ||
| training completed; transfer fee paid; | ||
| transferee may occupy Store’s site for | ||
| expected franchise term; transferee (at our | ||
| option) assumes your Franchise Agreement or | ||
| signs our then-current form of franchise | ||
| agreement and other documents for unexpired | ||
| portion of your original franchise term (then- | ||
| current form may have materially different | ||
| terms, except that your original Royalty, | ||
| Brand Fund contribution, and Tech Fee levels | ||
| and Area of Protection definition will remain | ||
| the same for unexpired portion of your | ||
| original franchise term and, if we previously | ||
| agreed to amend your Franchise Agreement | ||
| before you signed it, we will incorporate such | ||
| amendments into the then-current form of | ||
| franchise agreement that is signed by the | ||
| transferee); transferee agrees to repair and | ||
| upgrade; you (and transferring owners) sign | ||
| general release (if applicable state law | ||
| allows); we determine that sales terms and | ||
| financing will not adversely affect Store’s | ||
| operation post-transfer; you subordinate | ||
| amounts due to you; and you stop using | ||
| Marks and our other intellectual property | ||
| (also see (r) below). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 54–61)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, franchisees face restrictions when transferring their franchise agreement. 7 Brew must approve all transfers, and a franchisee cannot transfer the agreement without the company's prior written consent. This requirement extends to development rights under the Development Rights Rider (DRR). Specifically, Item 16.B of the Franchise Agreement and Section 9 of the DRR outline these stipulations.
7 Brew will approve a transfer of non-controlling ownership interest if the transferee meets the company's standards for non-controlling owners. The transferee must not be involved in a competitive business and must sign 7 Brew's current form of guaranty or Owner’s Undertaking of Non-Monetary Obligations, and pay a transfer fee. For transfers of franchise rights or controlling ownership interest, 7 Brew will not unreasonably withhold approval if certain conditions are met, as detailed in Section 16.C of the Franchise Agreement.
Additional conditions for transfer include ensuring the transferee meets 7 Brew's qualifications, is not restricted by another agreement, and is not in a competitive business. The franchisee must have paid all due amounts and not be in breach of the agreement. The transferee must complete training, pay a transfer fee, and agree to repair and upgrade the store. The franchisor also retains the right of first refusal to match any offer for the store or ownership interest. These provisions give 7 Brew significant control over who can become a franchisee and help maintain brand standards and consistency across the franchise system.