Under what condition will a 7 Brew development rider not be effective, resulting in no development rights?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
lve greater initial investment and operating capital requirements than those stated in the Franchise Disclosure Document provided to you before you signed this Rider. You must open all of the Traditional 7 BREW Stores in compliance with the Schedule, provided, however, that we are not obligated to execute any franchise agreement contemplated by this Rider if you have not complied with each and every condition in this Rider or otherwise do not meet our then-current requirements.
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- Subfranchising and Sublicensing Rights. This Rider does not give you any right to franchise, license, subfranchise, or sublicense others to develop and operate 7 BREW Stores. Only you (and/or Approved Affiliates) have the right to construct, develop, open, and operate Traditional 7 BREW Stores pursuant to this Rider. This Rider also does not give you (or your Approved Affiliates) any independent right to use the 7 BREW trademark or our other trademarks and commercial symbols. The right to use our trademarks and commercial symbols is granted only under a franchise agreement signed directly with us. This Rider only grants you potential development rights if you fully comply with its terms.
| 5. Development Fee. As consideration for the development rights we grant you under |
|---|
| this Rider, you must pay us—when you sign this Rider—a total of Thousand Dollars |
| ($) (the "Development Fee"). The Development Fee consists of (a) the Thirty-Five |
| Thousand Dollar ($35,000) initial franchise fee due under the First Franchise Agreement, plus (b) |
| Ten Thousand Dollars ($10,000) for each additional Traditional 7 BREW Store you have |
| committed to construct, develop, and operate in the Territory during this Rider's term. This Rider |
| will not be effective, and you will have no development rights, until we receive the Development |
| Fee. |
The Development Fee is:
- (i) consideration for the rights we grant you in this Rider and for reserving the Territory for you to the exclusion of others (except as provided in this Rider with respect to Non-Traditional 7 BREW Stores) while you are in compliance with this Rider;
- (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.
6. Grant of Franchises and Site Selection and Acquisition.
- (a) You must send us a separate application for each Traditional 7 BREW Store that you (or your Approved Affiliate) wish to develop in the Territory. You must locate, evaluate, select, and secure the Store's site. We will not search for or select the site for you. In granting you development rights under this Rider, we are relying on your knowledge of the real estate market in the Territory and your ability to locate and access sites.
- (b) We will give you our then-current criteria for Traditional 7 BREW Store sites (including, without limitation, population density and other demographic characteristics, visibility, traffic flow, competition, accessibility, ingress and egress, size, and other physical and commercial characteristics) to help you select and identify each Traditional 7 BREW Store site. We will review potential Traditional 7 BREW Store sites that you identify within the Territory but have no obligation to visit the Territory to inspect physically the sites you propose for your potential Stores.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Development Rights Rider grants potential development rights only if the franchisee fully complies with its terms. The rider does not grant any right to franchise, license, subfranchise, or sublicense others to develop and operate 7 Brew stores. Only the franchisee (and/or Approved Affiliates) has the right to construct, develop, open, and operate Traditional 7 Brew Stores pursuant to this Rider.
Specifically, the development rights under the Rider are not assignable without 7 Brew's prior written consent. A transfer of the development rights would be deemed to occur (and would be prohibited without prior written consent) if there is an assignment of the First Franchise Agreement, a transfer of a controlling ownership interest in the franchisee, a transfer of this Rider separate and apart from the First Franchise Agreement, or any other event attempting to assign the development rights.
Furthermore, 7 Brew has the right to terminate the Rider if the franchisee fails to satisfy any development obligation under the Schedule and does not cure such failure within ninety (90) days after receiving written notice from 7 Brew, or if the franchisee fails to satisfy any other obligation under this Rider, which default they have no right to cure. The rider can also be terminated if the First Franchise Agreement, or another franchise agreement between 7 Brew and the franchisee (or their Approved Affiliate) for a 7 Brew Store, is terminated by 7 Brew in compliance with its terms or by the franchisee (or their Approved Affiliate) without cause, or if 7 Brew has delivered a formal written notice of default to the franchisee (or their Approved Affiliate) under the First Franchise Agreement, or another franchise agreement between 7 Brew and the franchisee (or their Approved Affiliate) for a 7 Brew Store, and the franchisee (or their Approved Affiliate) fail to cure that default within the required timeframe.
Time is of the essence under this Rider, and the franchisee's rights under this Rider are subject to termination if they do not comply strictly with the development obligations provided in the Schedule and fail to cure such non-compliance within ninety (90) days after receiving written notice from 7 Brew. 7 Brew may enforce this Rider strictly.