If Beauty Bungalows obtains insurance for a franchisee, what is the administrative fee based on?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
- F. If you do not maintain the required insurance, then we may obtain it for you and you will owe us the cost of the insurance premium plus 20% of the premium amount as an administrative fee.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to Beauty Bungalows's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance coverage, Beauty Bungalows has the option to obtain the necessary insurance on behalf of the franchisee. In such cases, the franchisee is responsible for reimbursing Beauty Bungalows for the cost of the insurance premium.
In addition to the premium cost, Beauty Bungalows will charge an administrative fee. This fee is calculated as 20% of the insurance premium amount. For example, if the insurance premium is $1,000, the administrative fee would be $200, making the total amount owed to Beauty Bungalows $1,200.
This policy ensures that all Beauty Bungalows locations maintain adequate insurance coverage, protecting both the franchisee and the franchisor from potential liabilities. It also incentivizes franchisees to proactively manage their insurance requirements to avoid the additional administrative fee.