If a Bft franchisee fails to procure the required insurance, does this exclude other remedies available to the franchisor?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
ut limitation, the Studio's Commercial General Liability and any Umbrella Excess Liability insurance policies. All insurance policies must waive any subrogation rights or other rights to assert a claim back against Franchisor and shall contain a clause requiring notice to Franchisor thirty (30) days in advance of any cancellation or material change or cancellation to any such policy. Franchisee shall give Franchisor certificates of coverage at least annually. Failure to obtain or the lapse of any of the required insurance coverage shall be grounds for the immediate termination of this Agreement pursuant to Section 15.1, and Franchisee agrees that any losses, claims or causes of action arising after the lapse of or termination of insurance coverage will be the sole responsibility of Franchisee and that Franchisee will hold Franchisor harmless from all such losses, claims and/or causes of action. In addition, but not to the exclusion of the foregoing remedy, if Franchisee fails to procure or maintain the required insurance, Franchisor shall have the right and authority, but not the obligation, to procure immediately the insurance and Franchisee shall reimburse Franchisor for the cost of the insurance plus reasonable expenses immediately upon written notice.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, if a franchisee fails to procure or maintain the required insurance, this does not exclude other remedies available to Bft. In addition to other remedies, Bft has the right, but not the obligation, to procure the insurance immediately and the franchisee must reimburse Bft for the cost of the insurance plus reasonable expenses immediately upon written notice.
This means that Bft has several options if a franchisee fails to maintain the required insurance. Bft can purchase the insurance on behalf of the franchisee and then charge the franchisee for the cost. This ensures that the business remains insured and protects both the franchisee and Bft from potential liabilities. The franchisee is obligated to reimburse Bft for these costs promptly.
Furthermore, failure to obtain or the lapse of required insurance coverage is grounds for immediate termination of the Franchise Agreement. The franchisee is responsible for any losses, claims, or causes of action arising after the lapse or termination of insurance coverage and must hold Bft harmless from such events. This highlights the critical importance of maintaining continuous and adequate insurance coverage as a Bft franchisee.
Bft also requires the franchisee to submit a copy of a Certificate of Insurance, with Bft as an additional insured, at least thirty (30) days before commencing operation of the studio. Bft also has a security interest in all insurance proceeds to the extent the franchisee has any outstanding obligations to Bft. All insurance policies must waive any subrogation rights or other rights to assert a claim back against Bft and must contain a clause requiring notice to Bft thirty (30) days in advance of any cancellation or material change or cancellation to any such policy.