What section of the 7 Brew Franchise Agreement outlines the royalty rates that a franchisee must pay?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- ix. Royalties identify the percentage of Gross Sales that a franchisee must pay us (Royalty rates are set forth in Section 5.B of the Franchise Agreement).
- x. Brand Fund identifies the percentage of Gross Sales that we have the right to require a franchisee to pay us as a Brand Fund contribution (under Section 13.A of the Franchise Agreement). These figures do not represent the actual amounts that the Franchised Stores spent on advertising, marketing, and related expenses. Brand Fund expenses were actually at 1% of a Store's Gross Sales during Fiscal Year 2024.
- xi. Technology Fee identifies the percentage of Gross Sales that we have the right to require a franchisee to pay us as a Technology Fee (under Section 5.C of the Franchise Agreement). These figures do not represent the actual amounts that the Measured Stores spent on technology and related expenses. No Technology Fee was charged during Fiscal Year 2024.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 61–73)
What This Means (2025 FDD)
According to the 2025 7 Brew Franchise Disclosure Document, the royalty rates that a franchisee must pay are detailed in Section 5.B of the Franchise Agreement. Royalties are calculated as a percentage of the franchisee's gross sales. In addition to royalties, 7 Brew franchisees may also be required to contribute a percentage of gross sales to the Brand Fund, as outlined in Section 13.A of the Franchise Agreement.
Another potential fee is the Technology Fee, detailed in Section 5.C of the Franchise Agreement. However, the document notes that no Technology Fee was charged during Fiscal Year 2024. It is important for prospective franchisees to understand these fees, as they impact the overall profitability of the franchise.
The 7 Brew FDD also presents financial performance representations based on data from 180 stores (both company-owned and franchised) during Fiscal Year 2024. These representations include figures for gross sales, net sales, gross profit, and EBITDAR (earnings before interest, taxes, depreciation, amortization, and rent), providing potential franchisees with insights into the financial performance of existing stores. Understanding the sections of the Franchise Agreement that detail royalty rates and other fees is crucial for assessing the financial viability of a 7 Brew franchise.