Does a Bhc franchisee grant the Franchisor a waiver of subrogation regarding their insurance?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee hereby grants Franchisor a waiver of any right of subrogation which any insurer of Franchisee may acquire against Franchisor by virtue of payment of any loss under such insurance.
This provision applies regardless of whether Franchisor has received a waiver of subrogation endorsement from the insurer.
Franchisee's obligation to obtain and maintain the foregoing policies of insurance in the amount specified will not be limited in any way by reason of any insurance that may be maintained by Franchisor, nor will Franchisee's procurement of required insurance relieve it of liability under the indemnity provisions set forth in section 16.2 of this Agreement.
Franchisee's insurance procurement obligations under this section 8.9 are separate and independent of Franchisee's indemnity obligations under section 16.2 of this Agreement.
- (b) Within 30 days after the Opening Date and promptly after each succeeding anniversary of the Opening Date, Franchisee must promptly notify Franchisor of any and all claims against Franchisee and/or Franchisor under said policies of insurance and deliver to Franchisor a certificate evidencing such insurance is in full force and effect.
Such insurance certificate must contain a statement to the effect the certificate cannot be canceled without 30 days prior written notice to Franchisee and to Franchisor.
Franchisee must notify Franchisor in writing immediately regarding any cancellation, non-renewal or reduction in coverage or limits.
- (g) Franchisee's failure, for any reason, to procure and maintain the insurance coverage required under this Agreement, will be deemed a material breach of this Agreement.
- (h) Franchisee must be fully covered in all areas of operating a business. If Franchisee does not procure and maintain the required insurance coverage Franchisor may, but are not required to, procure insurance coverage on Franchisee's behalf and to charge the costs to Franchisee together with a reasonable fee for the expenses Franchisor incurs.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a franchisee is required to grant Bhc a waiver of subrogation. This means that the franchisee must waive the right of their insurance company to pursue Bhc for damages the insurer pays out due to a loss. This waiver applies regardless of whether Bhc has obtained a waiver of subrogation endorsement from the insurer.
Bhc's FDD also states that the franchisee's insurance coverage will be primary in respect to Bhc, the Owner of the Marks, and other affiliated companies identified by Bhc in writing, and their respective shareholders, members, managers, directors, officers, employees, and agents. Any insurance maintained by Bhc will be excess of the franchisee's insurance and will not contribute with it.
The franchisee must provide Bhc with a copy of their insurance policy and any endorsements upon issuance and renewal. Additionally, the franchisee is obligated to notify Bhc of any claims against them or Bhc under the insurance policies and provide a certificate of insurance within 30 days after the opening date and each anniversary thereafter. The certificate must state that the policy cannot be canceled without 30 days prior written notice to both the franchisee and Bhc. The franchisee must also inform Bhc immediately of any cancellation, non-renewal, or reduction in coverage or limits.
Failure to maintain the required insurance coverage is considered a material breach of the Franchise Agreement. If the franchisee fails to procure and maintain the necessary insurance, Bhc has the option, but not the obligation, to obtain insurance coverage on the franchisee's behalf and charge the franchisee for the costs, including a reasonable fee for expenses incurred by Bhc.