What happens if a Bang Cookies franchisee fails to maintain the required insurance policies?
Bang_Cookies Franchise · 2024 FDDAnswer from 2024 FDD Document
commencement of the Training Program, Franchisee must deliver, or cause to be delivered, to Franchisor a copy of the certificates of insurance demonstrating Franchisee's compliance with this Article 8. All insurance policies required must expressly provide that no less than 30 days' prior written notice shall be given to Franchisor in the event of a material alteration to, or cancellation of, any insurance policy Franchisee is required to maintain in accordance with this Agreement.
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, sha
Source: Item 23 — RECEIPTS (FDD pages 56–245)
What This Means (2024 FDD)
According to Bang Cookies' 2024 Franchise Disclosure Document, franchisees are required to maintain specific insurance policies throughout the term of the agreement. These policies protect the franchisee and also name Bang Cookies and its affiliates as additional insureds against claims related to personal injury, death, property damage, or any loss connected with the franchised business. The insurance must be written by a carrier with an AM Best Rating of at least A-, VII, and be reasonably acceptable to Bang Cookies. The specific types and amounts of coverage are detailed in the operations manual, which Bang Cookies can update periodically, but not more than once every two years.
If a Bang Cookies franchisee fails to secure or maintain the required insurance, Bang Cookies has the right, but not the obligation, to procure the insurance themselves. The franchisee will then be responsible for immediately paying all costs, fees, and expenses associated with this insurance, along with a reasonable administrative fee to Bang Cookies for their expenses in arranging the coverage.
Furthermore, failing to maintain the required insurance is also listed as an event of default under the franchise agreement. This gives Bang Cookies additional legal options beyond simply procuring the insurance and charging the franchisee. It is important for prospective franchisees to understand these requirements and ensure they can consistently meet the insurance obligations to avoid potential financial burdens and possible default on the franchise agreement.