Can Baya Bar change its insurance requirements during the term of the Franchise Agreement?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
We have the right to change our insurance requirements during the term of your Franchise Agreement, including the types of coverage and the amounts of coverage, and you must comply with those changes. If you do not obtain any insurance as required, we have the right (but not the obligation) to purchase insurance on your behalf and you must reimburse our costs related to this purchase plus a 10% administrative fee.
When you sign the lease for the Shop premises or 90 days after you sign the Franchise Agreement, whichever occurs first, you must obtain the insurance coverage for the Shop that is required by the terms of your lease and applicable law, and that we specify in the Manual or otherwise in writing. Your insurance coverage must be maintained during the term of the Franchise Agreement and must be obtained from a responsible, duly licensed carrier or carriers acceptable to us and having a rating of at least "A-VII" with A.M. Best Company. All insurance must be on an "occurrence" basis. Currently you must maintain the following insurance: (1) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Franchised Business, for full repair and replacement value (subject to a reasonable deductible); (2) Business interruption insurance covering at least 12 months of income; (3) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit; (4) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000; (5) Workers Compensation coverage as required by state law; and (6) any insurance required by the terms of your lease, required by law or that we may require in the future.
All insurance policies, except for workers' compensation, must name us, our affiliates and the officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees of each of them, as additional named insureds. All insurance policies must include a waiver of subrogation in favor of us and our affiliates, must be primary and non-contributing with any insurance carried by us or our affiliates, and must stipulate that we receive no less than 30 days' prior written notice
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 20–24)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, Baya Bar has the right to modify insurance requirements during the term of the Franchise Agreement. This includes the types and amounts of coverage required. Franchisees must comply with these changes.
If a Baya Bar franchisee fails to obtain the required insurance, Baya Bar has the right, but not the obligation, to purchase insurance on the franchisee's behalf. The franchisee is then responsible for reimbursing Baya Bar for the cost of the insurance, plus a 10% administrative fee.
Initially, franchisees must obtain insurance coverage when they sign the lease for the shop premises or 90 days after signing the Franchise Agreement, whichever occurs first. The insurance must meet the terms of the lease, applicable law, and Baya Bar's specifications in the manual or in writing. The insurance must be maintained during the term of the Franchise Agreement from a carrier acceptable to Baya Bar with a rating of at least "A-VII" with A.M. Best Company and be on an "occurrence" basis.
Currently, Baya Bar requires franchisees to maintain several types of insurance: (1) "Special" causes of loss coverage; (2) Business interruption insurance covering at least 12 months of income; (3) Commercial General Liability insurance of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit; (4) Business Automobile Liability insurance of not less than $1,000,000; (5) Workers Compensation coverage as required by state law; and (6) any insurance required by the terms of your lease, required by law or that Baya Bar may require in the future. All policies, except workers' compensation, must name Baya Bar and its affiliates as additional insureds and include a waiver of subrogation in favor of Baya Bar and its affiliates. Baya Bar must receive no less than 30 days' prior written notice of any material alteration or cancellation of the policies.