What happens if a Baya Bar franchisee fails to procure or maintain the required insurance?
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 secure or maintain the necessary insurance, Baya Bar has the right, but not the obligation, to obtain the insurance coverage themselves. 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 taking this action. The franchisee is required to pay Baya Bar immediately upon receiving notice of this action and its associated costs.
Baya Bar also requires franchisees to maintain comprehensive automobile liability insurance with a combined single limit of at least $1,000,000 for bodily injury and property damage if they operate any vehicle on behalf of the franchised business. Franchisees must provide and maintain current Certificates of Insurance with Baya Bar as evidence of the required coverages. If requested, franchisees must also provide copies of the insurance policies.
These stipulations ensure that Baya Bar franchisees maintain adequate insurance coverage, protecting both the franchisee and the franchisor from potential liabilities. The franchisor's ability to procure insurance on behalf of a non-compliant franchisee acts as a safety net, ensuring continuous coverage and minimizing risk to the Baya Bar system. Franchisees should ensure they understand and meet all insurance requirements to avoid incurring additional costs and potential disputes with the franchisor.