How will a Baya Bar franchisee be notified that the franchisor has undertaken to procure insurance on their behalf?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
If, for any reason, Franchisee should fail to procure or maintain the insurance required by this Agreement as revised from time to time for all franchisees by the Manual or otherwise in writing, Franchisor shall have the right and authority (without, however, any obligation) to immediately procure such insurance and to charge Franchisee for the cost thereof together with a reasonable fee for Franchisor's expenses in so acting, including all attorneys' fees.
Franchisee shall pay Franchisor immediately upon notice by Franchisor to Franchisee that Franchisor has undertaken such action and the cost thereof.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Baya Bar has the right to procure the insurance on the franchisee's behalf. The franchisee will be notified by Baya Bar that they have undertaken such action and of the associated cost. The franchisee is then required to pay Baya Bar immediately upon receiving this notice.
This means that if a Baya Bar franchisee's insurance lapses or does not meet the franchisor's requirements, Baya Bar can step in to secure the necessary coverage. This protects both the franchisee and the franchisor from potential liabilities. However, the franchisee is responsible for reimbursing Baya Bar for the cost of the insurance and any associated fees immediately upon notification.
This clause highlights the importance of maintaining adequate and up-to-date insurance coverage as a Baya Bar franchisee. Failure to do so not only puts the business at risk but also results in the franchisee incurring additional costs and fees imposed by the franchisor. Prospective franchisees should ensure they understand the insurance requirements and have a plan in place to maintain continuous coverage to avoid these potential expenses.