Under what circumstances is the 7 Brew Development Fee refundable?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (ii) fully earned by us when we and you sign this Rider; and
- (iii) not refundable under any circumstances, even if you do not comply or attempt to comply with the Schedule and we then terminate this Rider.
No portion of the Development Fee is refundable upon termination of this Rider or under any other circumstances. If we terminate this Rider because you fail to satisfy your development obligations under the Schedule, we will keep the Development Fee (which is not refundable) but otherwise will not seek to recover damages from you due solely to your failure to comply with the Schedule.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Development Fee is generally not refundable under any circumstances. The FDD states that the Development Fee is consideration for the development rights granted to the franchisee, which allows them to construct and develop Traditional 7 Brew stores within a specific territory. This fee also reserves the territory for the franchisee, excluding others from developing stores in the same area, with exceptions for Non-Traditional 7 Brew stores.
The Development Fee is considered fully earned by 7 Brew once the Development Rider is signed by both parties. This means that even if the franchisee fails to meet the development obligations outlined in the Schedule, or if 7 Brew terminates the Rider due to the franchisee's non-compliance, the Development Fee will not be refunded.
This non-refundable policy is a significant risk for potential 7 Brew franchisees. It means that if a franchisee is unable to fulfill their development obligations, they will lose the Development Fee in addition to losing their development rights. Prospective franchisees should carefully consider their ability to meet the development schedule and obligations before signing the Development Rider and paying the Development Fee. This is a fairly standard practice in the franchise industry, as initial fees are used to cover the franchisor's initial expenses in setting up the franchisee.