Under what conditions can 7 Brew terminate a Franchise Agreement with cause?

According to 7 Brew's 2025 Franchise Disclosure Document, 7 Brew has the right to terminate a Franchise Agreement if a franchisee commits certain violations as detailed in Section 18.B of the Franchise Agreement and Section 8 of the Development Rights Rider (DRR), as well as Section 4(b) of the Manufacturing Agreement. These violations fall into two categories: curable and non-curable defaults.

Curable defaults include issues such as failure to report Gross Sales, payment defaults to 7 Brew, insurance defaults, and defaults under any note, lease, or agreement relating to the Store’s operation or ownership. Franchisees have specific timeframes to correct these issues, such as 5 days to cure Gross Sales reporting, payment, and insurance defaults; 10 days to satisfy unpaid judgments of at least $25,000; 30 days to pay suppliers and cure other defaults not listed as non-curable; and 60 days to vacate any attachment, seizure, or levy of the Store. Additionally, franchisees must immediately begin correcting violations of material law and complete the correction within the time specified by law. If a store is damaged to the extent that it cannot operate at its current location, the franchisee must relocate and begin operating at a substitute site within 12 months.

Non-curable defaults, which allow for immediate termination, include material misrepresentation or omission, failure to open the Store by the deadline, abandonment or failure to operate for more than 7 consecutive days, unapproved transfer, felony conviction or guilty plea, dishonest conduct that adversely impacts 7 Brew's Marks, foreclosure on the Store’s assets, misuse of confidential information, violation of non-compete agreements, material underreporting of Gross Sales, disabling the Store’s computer system, closing the bank account from which 7 Brew debits funds without setting up a new account, failure to pay taxes, repeated defaults, assignment for the benefit of creditors, admission of inability to pay debts, violation of anti-terrorism laws, or causing or contributing to a data security incident or failure to comply with requirements to protect Consumer Data.

It is important to note that while termination of the DRR does not automatically terminate any existing franchise agreements, termination of a franchise agreement does entitle 7 Brew to terminate the DRR. Additionally, the Manufacturer has the right to terminate the Manufacturing Agreement for cause, such as failure to pay the required purchase price and to cure the failure within 10 days after notice, if the franchisee commits another default under the Manufacturing Agreement and fails to cure that default within 30 days after notice, or if the franchisee is involved in a bankruptcy-related event that is not dismissed within 60 days.