Is the Baya Bar franchisor obligated to procure insurance if the franchisee fails to do so?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.3 Failure to Procure.
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.
- 15.4 Increase in Coverage**.** The levels and types of insurance stated herein are minimum requirements.
Franchisor reserves the right to raise the required minimum requirements for any type of insurance or add additional types of insurance requirements as Franchisor deems reasonably prudent to require.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, while Baya Bar is not obligated to procure insurance for a franchisee, it does have the right and authority to do so if the franchisee fails to maintain the required insurance.
If a Baya Bar franchisee fails to procure or maintain the necessary insurance, Baya Bar has the right to obtain the insurance coverage. The franchisee will then be charged for the cost of the insurance, along with a reasonable fee to cover Baya Bar's expenses, including attorney's fees, for securing the insurance.
The franchisee is required to pay Baya Bar immediately after receiving notice that Baya Bar has taken this action and is required to cover the costs. The FDD also states that the levels and types of insurance mentioned are minimum requirements, and Baya Bar reserves the right to increase these minimums or add additional insurance requirements as deemed necessary.