What are the consequences if an Aplus franchisee fails to provide the required certificates of insurance to Sunoco after written notice?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- (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. Additionally, if, after written notice from Sunoco, the required certificates of insurance are not provided within the time set forth in the notice, in addition to the immediate suspension of deliveries of Motor Fuels as provided in Section 2.10 of your Motor Fuel Supply Agreement, this Lease may be terminated.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, failing to provide the required insurance certificates to Sunoco after receiving written notice constitutes a material default under the franchise agreement. This failure can lead to two significant consequences. First, Sunoco has the right to immediately suspend deliveries of motor fuels, as outlined in Section 2.10 of the Motor Fuel Supply Agreement. Second, Sunoco has the option to terminate the franchise agreement entirely.
Maintaining the required insurance coverage is a critical obligation for Aplus franchisees. The insurance policies must include Sunoco as an additional insured and loss payee. Franchisees must provide Sunoco with a certificate of insurance before the commencement of the agreement and renewal certificates before each policy renewal date. These certificates must include a provision ensuring that the policies cannot be canceled or materially changed without at least thirty days' prior written notice to Sunoco.
This requirement ensures that Sunoco's interests are protected in the event of any incidents or liabilities related to the Aplus store. The ability to suspend fuel deliveries and terminate the agreement underscores the importance Aplus places on franchisees meeting their insurance obligations. Prospective franchisees should carefully review the insurance requirements and ensure they can comply to avoid potential disruptions to their business and the risk of losing their franchise.