Can 7 Brew borrow money to cover Brand Fund deficits?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) The Brand Fund may spend in any fiscal year more or less than the total Brand Fund contributions in that year, borrow from us or others (paying reasonable interest) to cover deficits, invest any surplus for future use, and roll over unspent monies to the following year.
We may use new Brand Fund contributions to pay Brand Fund deficits incurred during previous years.
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, the Brand Fund may borrow money to cover deficits. Specifically, 7 Brew may borrow from themselves or others, paying reasonable interest to cover these deficits. This provides 7 Brew with financial flexibility in managing the Brand Fund. They can ensure that marketing and promotional activities continue even if current contributions are insufficient.
This borrowing capability means that 7 Brew can strategically invest in the brand's growth, addressing short-term financial shortfalls without immediately burdening franchisees with increased contributions. It also allows 7 Brew to manage the timing of expenditures, potentially front-loading investments in marketing initiatives and paying for them over time as the Brand Fund receives further contributions.
However, franchisees should be aware that 7 Brew will charge the Brand Fund reasonable interest for any borrowed funds. New Brand Fund contributions may be used to pay Brand Fund deficits incurred during previous years. Franchisees should monitor the Brand Fund's annual statement to understand how borrowing impacts the fund's overall financial health and how their contributions are being utilized to cover both current and past obligations.