Cut, chop, sew, staple. Hmmmmm… THAT looks nice!
(Click for mood music!) You take a regular Payment Bond that provides protection downstream for providers of labor and material. Then you make it go the opposite direction to give payment protect to the project owner or GC.
“We can remove his head and point it the other way!”
- What is this “Franky Bond” and when do you use it?
- How do you get one?
This creature is an Advance Payment Bond. You may run into one of these because they are part of the solution for contractors struggling to deal with rising material/equipment prices and long delivery dates. The bond enables contractors/subcontractors to collect payment before the items are installed, delivered to the job site or “suitably stored.” Such payments would normally not be contractually permitted – but our Franky Bond can make it happen. This enables the “Principal” (bond applicant) to collect funds, order the product and lock in prices. It may also help assure delivery at a time when the product is needed. Sounds great, but what is the underwriting? Are these hard to get?
A Performance and Payment Bond is not considered a “strict financial guarantee,” however the Franky Bond is. It is promising the proper handling of funds, or a claim can be made to recover the payment. You have to call that a financial guarantee. Such bonds are approved based on the good financial condition of the applicant.
Even when the principal has filed a Performance and Payment Bond, the Franky Bond may be required to facilitate payment outside the terms of the contract.
So there you have it. There’s always something new in the surety business!
* Don’t call him Frankenstein, he is “Frankenstein’s monster.”
* Do call us when you need a Franky Bond – for Advanced Payment on a construction contract.
FIA Surety: A carrier that provides A rated, T-listed Site, Subdivision and Contract Surety Bonds in all states!
Steve Golia: 856-304-7348