Does the Baya Bar franchisor have an obligation 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.
Source: Item 22 — CONTRACTS (FDD page 56)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, while the franchisee is responsible for maintaining the required insurance, Baya Bar has the right, but not the obligation, to procure insurance on behalf of the franchisee if the franchisee fails to do so.
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 is then responsible for covering the costs of the insurance, along with a reasonable fee to cover Baya Bar's expenses, including attorney's fees, for securing the insurance. The franchisee must pay Baya Bar immediately after receiving notice of this action and the associated costs.
Baya Bar also retains the right to increase the minimum insurance requirements or add new types of insurance as deemed necessary. The franchisee must provide proof of coverage that meets these updated requirements within 30 days of the change. This ensures that Baya Bar can protect its interests and maintain adequate coverage for all franchised locations, with the franchisee ultimately bearing the financial responsibility for compliance.