Bought a new Fender Strat 4 weeks ago - it developed "fret buzz" on the 7th fret over 6th 5th and 4th strings - contacted the dealer I bought it from - he said I would have to leave in it for a set-up adjustment to elliminate the buzzing as it can take the new guitar a while to settle down once guitar is taken out and played etc - would cost about $40-50. Does this diagnosis seem right? Any advice?

Yep - buy yourself a few Allen Keys & some feeler gauges (auto parts store) and raise the saddles or adjust the neck yourself. The owner's manual explains all this set-up stuff in great details, and it isn't hard at all.

Raising the saddles is EXTREMELY easy, and it could be something as simple as that, at least 'just to' eliminate the buzz. Feeler gauges will let you check the clearance of the strings at certain frets to let you know if the neck is bowed correctly (truss rod adjustment?).

Most these adjustments are like a 1/4 turn on an allen key, and you'd be all set.