Under what circumstances does 7 Brew have the right of first refusal to acquire a franchisee's business?
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. |
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, 7 Brew has the right of first refusal to acquire a franchisee's business. Specifically, 7 Brew can match any offer a franchisee receives for their store, including the physical structure of the store itself, or any ownership interest in the franchisee's business or the entity that controls the franchisee. This provision is detailed in Section 16.G of the Franchise Agreement. This right extends to offers for the underlying real estate on which the store is located, provided the franchisee or their owner directly or indirectly holds the title to that real estate and wishes to sell it as part of the sale or transfer of the business.
This right of first refusal allows 7 Brew to maintain control over its franchise locations and brand. If a franchisee decides to sell their business, 7 Brew has the opportunity to purchase the location themselves, ensuring that it can select the future operator or maintain ownership of the site. This can be particularly important in strategic locations or markets where 7 Brew wants to expand or maintain a strong presence.
For a prospective franchisee, this means that selling the 7 Brew business is not as simple as accepting the highest offer. Any offer must first be presented to 7 Brew, giving them the option to purchase the business on the same terms. This could potentially delay the sale process or limit the pool of potential buyers to those who are willing to wait for 7 Brew to make a decision. Franchisees should consider this when planning their exit strategy and negotiating potential sale terms.
It is important for prospective franchisees to carefully review Section 16.G of the Franchise Agreement to fully understand the implications of 7 Brew's right of first refusal. Franchisees should also seek legal counsel to understand their rights and obligations when considering a sale of their 7 Brew business.