Under what condition is the sale of real estate considered a 'transfer' for a 7 Brew franchise?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
(2) Right-of-First-Refusal for Transfer of Store's Underlying Real Estate Alongside Transfer of Franchise Rights or Controlling Ownership Interest. In addition to our rights under clause (1) above, if you or one or more of your owners (directly or through another entity) hold title to the underlying real estate on which the Store's physical structure is located and desire to sell that real estate during the Term (or, if applicable, during a successor-franchise term) for money or other consideration (which can be independently valued in dollars) in conjunction with any sale
or transfer with respect to which we have the rights described under clause (1) above, the titleholder agrees to obtain from a fully-disclosed buyer, and send us, a true and complete copy of a bona fide, executed written offer (which we may require to include a copy of all proposed agreements related to the sale). The offer must include details of the proposed sale's payment terms and the financing sources and terms of the proposed purchase price. To be a valid, bona fide offer, the proposed purchase price must be a fixed-dollar amount, without any contingent payments of purchase price (such as earn-out payments). We may require the title-holder to send us copies of any materials or information it sends to the proposed buyer or transferee regarding the possible transaction.
We may, by written notice delivered to the title-holder within thirty (30) days after we receive both an exact copy of the offer and all other information we request, elect to purchase title to the underlying real estate for the price and on the terms and conditions contained in the offer, provided that: (i) we may substitute cash for any form of consideration proposed in the offer; (ii) our credit will be deemed equal to the credit of any proposed buyer; (iii) the closing of our purchase will not (unless we agree otherwise) be earlier than sixty (60) days after we notify the title-holder of our election to purchase or, if later, the closing date proposed in the offer; and (iv) we must receive, and the title-holder agrees to make, all customary representations, warranties, and indemnities given by the seller of real estate.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the sale of real estate is tied to franchise transfer considerations when the franchisee or their owners hold the title to the property where the 7 Brew store is located. Specifically, if the franchisee desires to sell the real estate during the franchise term (or any successor term) in conjunction with a sale or transfer of the franchise rights or a controlling ownership interest, this triggers certain rights for 7 Brew. This condition ensures that 7 Brew has the opportunity to evaluate and potentially control the location of its franchises, even if the real estate is owned by the franchisee.
In such a scenario, the titleholder (franchisee or owner) must obtain a bona fide, executed written offer from a prospective buyer and provide a complete copy to 7 Brew. This offer must include all details of the proposed sale, including payment terms and financing sources. The proposed purchase price must be a fixed-dollar amount without any contingent payments. 7 Brew also has the right to request any materials or information shared with the potential buyer.
7 Brew then has the option to exercise a right of first refusal, allowing them to purchase the real estate at the same price and terms as the offer. They have 30 days to notify the titleholder of their intent to purchase the property. 7 Brew can substitute cash for any proposed form of consideration, and their credit is considered equal to that of any proposed buyer. The closing of the purchase can occur no earlier than 60 days after 7 Brew's notification or the closing date proposed in the offer, whichever is later. The titleholder must also provide customary representations, warranties, and indemnities given by the seller of real estate. This clause protects 7 Brew's interests by giving them control over the store's location if the franchisee decides to sell both the business and the property.