What is the consequence if an Aplus franchisee fails to maintain the required insurance coverage and provide certificates to Sunoco within the required time?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
llowing additional insurance coverages:
- (a) GARAGEKEEPERS LEGAL LIABILITY INSURANCE coverage for all automobiles with minimum limits of $100,000 per occurrence.
- (b) GARAGE LIABILITY INSURANCE coverage for bodily injury and property damage with minimum limits of at least $500,000 combined single limit per occurrence.
- (c) AUTOMOBILE LIABILITY INSURANCE coverage both bodily injury and property damage with minimum limits of at least $500,000 combined single limit per occurrence.
NOTE: SUNOCO MUST BE INCLUDED AS AN ADDITIONAL INSURED AND LOSS PAYEE ON ALL INSURANCE POLICIES.
FOR TURNPIKE LOCATIONS, THE APPLICABLE TURNPIKE AUTHORITY AND CONCESSIONAIRE SHALL BE INCLUDED AS AN ADDITIONAL INSURED AND LOSS PAYEE ON ALL INSURANCE POLICIES.
- (H) You shall provide to Sunoco before commencement of this Agreement a certificate or other appropriate evidence of insurance coverage as above required, satisfactory to Sunoco, and a renewal certificate of such policy shall be furnished to Sunoco before each policy renewal date. Each certificate shall include a provision that such policies may not be canceled or materially changed without at least thirty (30) days' prior written notice to Sunoco. You shall keep such insurance coverage in full force and effect during your Franchise relationship with Sunoco.
- (I) Your failure to maintain required insurance coverage, and to pay the premiums and renewal premiums of all such policies of insurance as they become due and payable, and to deliver all such certificates of insurance and renewals thereof or duplicate originals to Sunoco within the time required, shall constitute a material default by you under the terms of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, failing to maintain the required insurance coverage and provide the necessary certificates to Sunoco constitutes a material default under the terms of the Franchise Agreement. Specifically, Sunoco must be included as an additional insured and loss payee on all insurance policies. Franchisees must provide Sunoco with a certificate or other evidence of insurance coverage before the agreement commences, along with renewal certificates before each policy renewal date. These certificates must ensure that the policies cannot be canceled or materially changed without at least thirty days' prior written notice to Sunoco, and the insurance coverage must remain in full effect throughout the franchise relationship.
If a franchisee fails to maintain the required insurance, pay the premiums, and deliver the certificates within the specified time, it is considered a material default. In addition to this, if the franchisee does not provide the required certificates of insurance after receiving written notice from Sunoco, Sunoco can immediately suspend deliveries of Motor Fuels, as stipulated in Section 2.10 of the Motor Fuel Supply Agreement, and the lease may be terminated.
Furthermore, Aplus has the right, but not the obligation, to procure the necessary insurance coverage if the franchisee fails to do so. The franchisee will then be charged for the premiums, along with a reasonable fee for expenses incurred by Aplus in procuring the insurance, up to a maximum of $1,000. These charges are payable immediately upon notice. This provision ensures that the Aplus location remains insured, protecting both the franchisee and Aplus from potential liabilities, and allows Aplus to take swift action to maintain compliance and mitigate risks associated with uninsured operations.
In addition to the above consequences, the franchisee's failure to maintain required insurance coverage and to supply Sunoco with current insurance certificates evidencing such coverage is also listed as one of the reasons for Sunoco's Right to Nonrenew the franchise agreement.