Under what circumstances might Azal Coffee purchase insurance at the franchisee's expense?
Azal_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
- (8) The estimate in this table is an estimated range of the initial cost for insurance for your Franchise Business.
The low end of the range is based on the insurance company accepting a partial up-front payment of 50%, which some insurance companies may do if you meet their credit requirements.
The high end of the range is based on the full cost for a year of coverage.
Evidence of insurance coverage must be provided at least 14 days before you begin operating your Franchise Business.
Certificates of renewal must be provided no later than 14 days before the expiration date of each policy.
If you do not provide us with evidence of these insurance policies at any due date, we may purchase that insurance at your expense.
You must immediately pay for any insurance obtained by us.
Each required policy of insurance must name us as an additional insured and must provide that we will be given 30 days' notice before cancellation, modification or amendment of the policy.
Your lease may require higher limits or additional coverages.
We may change or modify insurance coverages in our discretion.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 19–22)
What This Means (2024 FDD)
According to Azal Coffee's 2024 Franchise Disclosure Document, Azal Coffee may purchase insurance at the franchisee's expense if the franchisee fails to provide evidence of required insurance policies by their due dates. The franchisee is then obligated to immediately pay Azal Coffee for any insurance obtained on their behalf.
Specifically, franchisees must provide evidence of insurance coverage at least 14 days before beginning operation of their Azal Coffee franchise. Furthermore, certificates of renewal must be provided no later than 14 days before the expiration date of each policy. These insurance policies must name Azal Coffee as an additional insured and provide them with 30 days' notice before any cancellation, modification, or amendment of the policy.
The estimated initial cost for insurance ranges from $2,500 to $5,000, payable before opening the franchise. The low end of this range assumes a 50% upfront payment is accepted by the insurance company, while the high end covers the full year's coverage. This cost is part of the franchisee's initial investment, which ranges from $270,500 to $420,000. The lease agreement may also stipulate higher insurance limits or additional coverages, and Azal Coffee retains the discretion to change or modify insurance coverages as they see fit.