Who is responsible for losses, claims, or causes of action arising after a lapse in insurance coverage for a Bft franchise?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 79–265)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, the franchisee is solely responsible for losses, claims, or causes of action arising after a lapse or termination of required insurance coverage. The franchisee must also hold Bft harmless from all such losses, claims, and/or causes of action. This requirement underscores the critical importance of maintaining continuous and adequate insurance coverage as mandated by the franchise agreement. Failure to do so can expose the franchisee to significant financial risk.
Bft mandates that franchisees secure and maintain several types of insurance, including Commercial General Liability, Umbrella Excess Liability, Automobile Liability, Workers Compensation, Property insurance, and Employment Practices Liability insurance. These policies must be written by an insurance company licensed in the state where the Bft studio operates and have at least an "A" Rating Classification as indicated in A.M. Best's Key Rating Guide. Furthermore, Bft reserves the right to upgrade insurance requirements based on industry standards, market conditions, and landlord requirements, and franchisees must revise their coverage accordingly within sixty days of notice from Bft.
Franchisees must include Bft and its affiliates as additional insureds on their insurance policies and ensure that all policies waive subrogation rights against Bft. Certificates of coverage must be provided to Bft annually, demonstrating compliance with these insurance requirements. Bft also has the right, but not the obligation, to procure insurance on behalf of the franchisee if the franchisee fails to do so, with the franchisee responsible for reimbursing Bft for the costs and expenses incurred. This comprehensive insurance framework is designed to protect both the franchisee and Bft from potential liabilities, but the ultimate responsibility for maintaining continuous coverage rests with the franchisee.