Under what conditions will 7 Brew approve the transfer of a non-controlling ownership interest?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
levy, attachment, or execution by your creditors or any financial institution. Any security interest that may be created in this Agreement by virtue of Section 9-408 of the Uniform Commercial Code is limited as described in Section 9-408(d) of the Uniform Commercial Code.
C. Conditions for Approval of Transfer
If you and your owners are in full compliance with this Agreement, then, subject to this Section 16's other provisions:
- (1) We will approve the transfer of a non-controlling ownership interest in you if the proposed transferee and its owners are of good moral character, have no ownership interest in and do not perform services for (and have no affiliates with an ownership interest in or performing services for) a Competitive Business, otherwise meet our then-applicable standards f
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the company will approve the transfer of a non-controlling ownership interest if the franchisee and their owners are in full compliance with the Franchise Agreement. The proposed transferee and their owners must be of good moral character, and they cannot have any ownership interest in, or perform services for, a Competitive Business. A Competitive Business is defined as any business that derives more than 25% of its revenue from selling coffee, or any business that grants franchises or licenses to others to operate such a business, other than a 7 Brew store.
Additionally, the proposed transferee must meet 7 Brew's then-applicable standards for non-controlling owners of 7 Brew store franchisees. The transferee must also sign 7 Brew's then-current form of Guaranty and Assumption of Obligations or, if applicable, Owner's Undertaking of Non-Monetary Obligations. Finally, the franchisee must pay 7 Brew a $1,000 transfer fee.
It is important to note that these conditions apply specifically to the transfer of a non-controlling ownership interest. The FDD outlines separate and more stringent conditions for transfers involving the franchise rights or a controlling ownership interest. A prospective franchisee should carefully review Section 16 of the Franchise Agreement to fully understand all the requirements and restrictions related to ownership transfers.