Under what conditions can a 7 Brew franchisee transfer their Franchise Agreement to a wholly-owned or affiliated entity?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
Notwithstanding Section 16.C above, if you are in full compliance with this Agreement, you may transfer this Agreement, together with the Operating Assets and all other assets associated with the Store (including its physical structure), to an Entity that will conduct no business other than the Store and, if applicable, other 7 BREW Stores and of which you or your then-existing owners own and control one hundred percent (100%) of the equity and voting power of all issued and outstanding ownership interests, provided that all Store assets are owned, and the Store is operated, only by that single Entity. The Entity must expressly assume all of your obligations under this Agreement, but you will remain personally liable under this Agreement as if the transfer to the Entity did not occur. Transfers of ownership interests in that Entity are subject to the restrictions in Section 16.C.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, a franchisee may transfer their Franchise Agreement to a wholly-owned or affiliated entity under specific conditions. The franchisee must be in full compliance with the existing Franchise Agreement. The transfer can only be made to an entity that conducts no business other than the 7 Brew store and, if applicable, other 7 Brew stores. The franchisee or their existing owners must own and control 100% of the equity and voting power of the entity. All store assets must be owned and operated solely by this single entity.
The entity assuming the franchise must expressly take on all of the franchisee's obligations under the Franchise Agreement. Importantly, the original franchisee remains personally liable under the agreement even after the transfer. Any subsequent transfers of ownership interests in the new entity are subject to the same restrictions outlined in Section 16.C of the agreement, which details the general conditions for transfer approval.
This provision allows 7 Brew franchisees some flexibility in structuring their business operations, such as creating a separate legal entity for each store or for estate planning purposes, while ensuring that the franchisor maintains control over who operates the franchise and that the original franchisee remains accountable for the store's performance. Prospective franchisees should carefully consider these conditions and restrictions, as they could impact their ability to sell or transfer their franchise in the future.