What are the consequences if a Bang Cookies franchisee fails to maintain required insurance policies?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
In the event Franchisee fails, for any reason, to procure or maintain the insurance required by this Agreement, then Franchisor has the right and authority (but not the obligation) to immediately procure insurance and charge all costs, fees, and expenses associated with same to Franchisee, which such charges, together with a reasonable administrative fee for Franchisor's expenses in so acting, shall be immediately payable by Franchisee to Franchisor upon demand. The foregoing remedies are in addition to any other remedies Franchisor may have under this Agreement, at law, or in equity.
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies's 2024 Franchise Disclosure Document, franchisees are required to maintain specific insurance policies throughout the term of the agreement. If a franchisee fails to maintain the required insurance, Bang Cookies has the right, but not the obligation, to procure the insurance themselves.
If Bang Cookies chooses to obtain insurance on behalf of the franchisee, the franchisee is responsible for immediately paying all costs, fees, and expenses associated with the insurance. In addition to these direct costs, Bang Cookies will also charge a reasonable administrative fee to cover their expenses for arranging the insurance. This administrative fee is also payable immediately upon demand.
The FDD specifies that these remedies available to Bang Cookies are in addition to any other legal or contractual remedies they may have. Furthermore, failure to maintain required insurance policies is also listed as an event of default under the franchise agreement. This could potentially lead to further actions from Bang Cookies, including termination of the franchise agreement.