What is the increased bond penalty amount for 7 Brew, effective September 11, 2024?
7_Brew Franchise · 2025 FDDAnswer from 2025 FDD Document
o any bond or understanding to which it is attached.
I, Kevin E. Hughes, the undersigned, Assistant Secretary of each of the Companies, do hereby certify that the above and foregoing is a true and correct copy of the Power of Attorney executed by said Companies, which remains in full force and effect.
Dated this
day of October 2023
Kevin E. Hughes, Assistant Secretary
INCREASE PENALTY RIDER
BOND NO. 107883372
To be attached and form a part of Bond No. 107883372 dated the 13th Day of October, 2023, executed by Travelers Casualty and Surety Company of America as surety, on behalf of Brew Culture Franchise, LLC as current principal of record, and in favor of State of Maryland, as Obligee for Franchisor Bond, and in the amount of Six Hundred Thousand Dollars and 00/100 ($600,000.00).
In consideration of the agreed premium charged for this bond, it is understood and agreed that Travelers Casualty and Surety Company of America hereby consents that effective from the 11th Day of September, 2024, said bond shall be amended as follows:
THE BOND PENALTY SHALL BE INCREASED:
FROM: Six Hundred Thousand Dollars and
Source: Item 22 — CONTRACTS (FDD pages 82–83)
What This Means (2025 FDD)
According to 7 Brew's 2025 Franchise Disclosure Document, a rider to the surety bond was issued on September 11, 2024, increasing the bond penalty. The original bond amount was $600,000.00, and the increase raises the total to $850,000.00. This change was made by Travelers Casualty and Surety Company of America, the surety, on behalf of Brew Culture Franchise, LLC, the principal. The bond is in favor of the State of Maryland as the obligee for the franchisor bond.
This increase in the bond penalty suggests that 7 Brew is required to provide a higher level of financial assurance to the State of Maryland. This could be due to regulatory requirements or to address potential financial risks associated with the franchise. The surety bond serves as a guarantee that 7 Brew will fulfill its financial obligations, and if the company fails to do so, the surety company may be required to compensate the affected parties up to the bond amount.
For a prospective 7 Brew franchisee, this information is relevant because it indicates the financial safeguards in place to protect franchisees and the regulatory scrutiny the franchise is under. While the franchisee does not directly pay for this bond, it reflects on the franchisor's financial stability and compliance with state regulations. Franchisees in Maryland may find this particularly relevant, as the bond is specifically for compliance within that state.
It is important to note that the aggregate liability of the bond will not exceed the amount of liability assumed at the time any default acts were committed, and the liability is not cumulative. This means that the bond covers specific incidents up to the specified amount, rather than providing an unlimited or ever-increasing coverage.