What happens if a Best Brains franchisee fails to maintain the required insurance coverage?
Best_Brains Franchise · 2025 FDDAnswer from 2025 FDD Document
You shall purchase and maintain during the term of this Agreement insurance coverage as we may prescribe from time to time. This includes, but is not limited to, workers' compensation, comprehensive public liability and property damage, business interruption, and general and umbrella coverages. You shall maintain coverage under one or more insurance policies containing the terms, conditions, and minimum liability protection amount that we have specified. All insurance policies must be issued by insurance carriers approved by us.
We may from time to time increase the minimum amount of coverage required under any policy, and require different or additional kinds of insurance to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
All insurance policies must name the Company (and its officers, directors, managers, shareholders, members and employees) as additional insureds, must contain a waiver by the insurance carrier of all subrogation rights against Company, and must provide that we will receive thirty (30) days advance written notice of termination, expiration, cancellation, or modification of any such policy.
Prior to opening, and annually thereafter, you shall furnish us with evidence of insurance, renewal, or extension of each such insurance policy, together with evidence of payment of premiums, evidencing the required limits.
If you do not maintain insurance as required, we may, obtain such insurance and keep the same in full force and effect on your behalf. If we do, you shall reimburse the Company for all premiums and other expenses incurred by us in connection with obtaining such insurance.
Source: Item 23 — RECEIPTS (FDD pages 42–190)
What This Means (2025 FDD)
According to Best Brains' 2025 Franchise Disclosure Document, franchisees are required to purchase and maintain specific insurance coverage throughout the term of the franchise agreement. This includes workers' compensation, comprehensive public liability and property damage, business interruption, and general and umbrella coverages. The franchisee must maintain coverage under policies that meet Best Brains' specified terms, conditions, and minimum liability protection amounts, issued by insurance carriers approved by Best Brains.
The Best Brains franchise agreement stipulates that Best Brains can increase the minimum coverage required or mandate different or additional kinds of insurance to reflect inflation, new risks, changes in law, higher damage awards, or other relevant changes. All insurance policies must name Best Brains (and its officers, directors, managers, shareholders, members, and employees) as additional insureds, include a waiver of subrogation rights against Best Brains, and provide Best Brains with 30 days' advance written notice of any termination, expiration, cancellation, or modification. Franchisees must furnish evidence of insurance and premium payments to Best Brains prior to opening and annually thereafter.
If a Best Brains franchisee fails to maintain the required insurance, Best Brains has the right to obtain the necessary insurance to keep the coverage in effect on behalf of the franchisee. In such cases, the franchisee is responsible for reimbursing Best Brains for all premiums and expenses incurred in obtaining the insurance. This provision ensures that the franchisor is protected from potential liabilities arising from the franchisee's operations, and it underscores the importance of maintaining continuous and adequate insurance coverage as a Best Brains franchisee.