Can the Aplus Franchise Agreement be terminated if the franchisee fails to maintain required insurance coverage and provide Sunoco with current insurance certificates?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
(19) your failure to maintain required insurance coverage and to supply Sunoco with current insurance certificates evidencing such coverage;
(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. 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, the franchise agreement can be terminated if the franchisee fails to maintain the required insurance coverage and provide Sunoco with current insurance certificates. Specifically, failing to maintain the required insurance and supply Sunoco with proof of that insurance is grounds for termination.
Furthermore, Aplus requires that Sunoco be included as an additional insured and loss payee on all insurance policies. For turnpike locations, the applicable turnpike authority and concessionaire must also be included as additional insureds and loss payees. Franchisees must provide Sunoco with evidence of insurance coverage before the commencement of the agreement and renewal certificates before each policy renewal date. These certificates must include a provision that the policies cannot be canceled or materially changed without at least thirty days' prior written notice to Sunoco.
Failure to maintain the required insurance coverage, pay premiums, and deliver the required certificates within the specified time constitutes a material default under the Aplus Franchise Agreement. If the franchisee fails to provide the required certificates of insurance after written notice from Sunoco, Sunoco can suspend motor fuel deliveries and terminate the lease. This highlights the critical importance of maintaining continuous and documented insurance coverage to avoid potential disruptions and termination of the Aplus franchise agreement.