Does termination of the DRR impact then-effective 7 Brew franchise agreements?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| f. Termination by franchisor with cause | 18.B of Franchise Agreement and 8 of DRR 4(b) of Manufacturing Agreement | We have the right to terminate your Franchise |
| Agreement (and development rights) only if | ||
| you or your owners commit one of several | ||
| violations. | ||
| While termination of the DRR does not | ||
| impact any then-effective franchise | ||
| agreements, termination of a franchise | ||
| agreement entitles us to terminate the DRR. |
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 termination of the Development Rights Rider (DRR) does not impact any franchise agreements that are already in effect. However, if a 7 Brew franchise agreement is terminated, 7 Brew has the right to terminate the DRR. This distinction is important for prospective franchisees to understand, especially those considering expanding their operations through development rights.
This provision protects franchisees who have already established 7 Brew locations under existing franchise agreements. Even if the DRR is terminated, their current franchise agreements remain valid and enforceable. This offers a level of security and stability for franchisees who have invested time and resources into building their 7 Brew business.
However, it also means that if a franchisee's performance or compliance issues lead to the termination of their franchise agreement, 7 Brew can also terminate the DRR, preventing further development under that agreement. This clause incentivizes franchisees to maintain good standing and adhere to the terms of their franchise agreement to preserve their development rights.