If an Aplus franchisee fails to maintain the minimum insurance requirements, what is the maximum administrative fee the franchisee will be charged by the Franchisor?

According to Aplus's 2024 Franchise Disclosure Document, if a franchisee fails to maintain the minimum required insurance, Aplus has the right to procure the insurance on the franchisee's behalf, although they are not required to do so. In addition to reimbursing Aplus for the cost of the premium, the franchisee will also be responsible for paying a reasonable administrative fee. This administrative fee will not exceed $1,000.

This means that if an Aplus franchisee neglects to secure or maintain the necessary insurance coverage, Aplus can step in to obtain the insurance themselves. The franchisee is then obligated to reimburse Aplus for the insurance premium paid. Furthermore, Aplus will charge an additional administrative fee to cover the costs associated with procuring the insurance on behalf of the franchisee.

The administrative fee is capped at $1,000, providing a clear limit to the additional expense a franchisee might incur. This fee is considered reasonable, but the FDD does not define what factors determine the reasonableness of the fee, only that it cannot exceed $1,000. It is important to note that Aplus's right to procure insurance on the franchisee's behalf does not replace any other legal remedies available to Aplus due to the franchisee's failure to maintain insurance.

Prospective Aplus franchisees should be aware of these potential costs and ensure they understand the minimum insurance requirements to avoid these fees. Franchisees should clarify with Aplus what specific costs the administrative fee covers and under what circumstances the full $1,000 would be charged.