What section of the 7 Brew Franchise Agreement discusses non-competition covenants after the franchise is terminated or expires?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| 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). | ||
| n. Franchisor’s right of first refusal to acquire franchisee’s business | 16.G of Franchise Agreement | We have the right to match any offer for your |
| Store (including its physical structure) or | ||
| ownership interest in you or entity that | ||
| controls you. | ||
| We have the right to match any offer for | ||
| underlying real estate on which Store’s | ||
| physical structure is located if you or your | ||
| owner directly or indirectly holds title to that | ||
| underlying real estate and wishes to sell that | ||
| real estate as part of any sale or transfer with | ||
| respect to which we have the right-of-first- | ||
| refusal described above. | ||
| o. Franchisor’s option to | Not Applicable | We do not have this right. We do not have this right. |
| purchase franchisee’s | ||
| business | ||
| p. Death or disability of | 16.E of Franchise | Must transfer to approved party (which may |
| franchisee | Agreement | |
| include immediate family member) within 6 | ||
| months. | ||
| q. Non-competition covenants during the term of the franchise | 12 of Franchise Agreement | No owning interest in, performing services |
| for, or loaning money or guaranteeing loan to | ||
| competitive business, wherever located or | ||
| operating; no diverting business to | ||
| competitive business; and no solicitation of | ||
| other franchisees for other commercial | ||
| purposes. “Competitive Business” means any | ||
| (a) business deriving more than 25% of its | ||
| revenue from selling coffee, or (b) business | ||
| granting franchises or licenses to others to | ||
| operate the type of businesses described in | ||
| clause(a). | ||
| r. Non-competition covenants after the franchise is terminated or expires | 19.E of Franchise Agreement | For 2 years after franchise term, no owning |
| interest in or performing services for | ||
| Competitive Business located or operating at | ||
| Store’s site, within 3 miles of former Store | ||
| site, or within 3 miles of physical location of | ||
| another 7 BREW Store (same restrictions | ||
| apply after transfer). |
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, the non-competition covenants that apply after the franchise is terminated or expires are detailed in Section 19.E of the Franchise Agreement.
Specifically, for a period of two years after the franchise term ends, a former franchisee is restricted from owning an interest in, or performing services for, a Competitive Business. This restriction applies if the Competitive Business is located or operating at the former 7 Brew Store's site, within 3 miles of the former store site, or within 3 miles of the physical location of another 7 Brew store.
These non-competition terms also apply after a transfer of the franchise. This means that anyone who takes over a 7 Brew franchise is subject to the same restrictions if they later leave the system. Prospective franchisees should carefully review Section 19.E of the Franchise Agreement to fully understand the scope and limitations of these post-termination non-compete obligations.