Under what circumstances is the initial franchise fee for a 7 Brew store not refundable?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement
You must pay us a $35,000 initial franchise fee in a lump sum when you sign the Franchise Agreement for your first 7 BREW Store (this initial franchise fee is part of the development fee described below). The initial franchise fee for the 2nd and each subsequent 7 BREW Store you develop under a Development Rights Rider to the Franchise Agreement is $25,000. That payment is due within 5 days after the date on which you open the 7 BREW Store for business. The initial franchise fee is not refundable under any circumstances.
If you purchase an existing Store from a franchisee, you will not pay an initial franchise fee. Instead, we have the right to receive a transfer fee from you or the selling franchisee (depending on your arrangement). That payment is not refundable.
Source: Item 5 — INITIAL FEES (FDD pages 14–16)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the initial franchise fee is not refundable under any circumstances. Specifically, the initial franchise fee of $35,000 for the first 7 Brew store, paid when signing the Franchise Agreement, is non-refundable. Similarly, the initial franchise fee of $25,000 for the 2nd and each subsequent 7 Brew store developed under a Development Rights Rider is also non-refundable.
Furthermore, the development fee, which includes the initial franchise fee for the first store plus $10,000 for each additional store under the Development Rights Rider (DRR), is also non-refundable under any circumstances. This means that if a franchisee signs the DRR, pays the development fee, but then cannot find suitable sites or chooses not to proceed with the development, 7 Brew retains the entire development fee.
This non-refundable policy is a significant consideration for prospective franchisees. It means that once the Franchise Agreement or DRR is signed and the fees are paid, the franchisee bears the risk of losing those funds if they are unable to proceed with opening or developing the 7 Brew stores. This is fairly standard in the franchise industry, as the franchisor incurs costs in evaluating and approving the franchisee. However, prospective franchisees should carefully evaluate their ability to meet the development obligations before committing to a DRR and paying the associated fees.