When are insurance premiums due to Baya Bar if Baya Bar obtains insurance on behalf of the franchisee?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
| Fees (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Insurance Premiums | Reimbursement of our costs, plus 10% administrative fee | On demand | If you do not maintain the required insurance coverages, we have the right (but not the obligation) to obtain insurance on your behalf. |
Source: Item 6 — OTHER FEES (FDD pages 11–16)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, if a franchisee does not maintain the required insurance coverages, Baya Bar has the right to obtain insurance on the franchisee's behalf. If Baya Bar exercises this right, the franchisee must reimburse Baya Bar for the costs of the insurance premiums, plus a 10% administrative fee. These insurance premiums are due to Baya Bar 'on demand'.
This means that Baya Bar can request immediate payment from the franchisee for the insurance costs and the administrative fee. The 'on demand' payment term is not uncommon in franchise agreements for costs incurred by the franchisor on behalf of the franchisee.
It is important for a prospective Baya Bar franchisee to understand the circumstances under which Baya Bar might obtain insurance on their behalf and to factor the potential for these 'on demand' payments into their financial planning. Maintaining the required insurance coverage is crucial to avoid this situation and the additional 10% administrative fee.