If the Bhc Master Franchisee fails to procure and maintain the required insurance coverage, can the Franchisor charge the costs of procuring insurance on the Master Franchisee's behalf to the Master Franchisee?

According to Bhc's 2025 Franchise Disclosure Document, if a Master Franchisee fails to secure and maintain the necessary insurance coverage as stipulated in the agreement, it will be considered a material breach of the agreement. In such instances, Bhc has the option, but not the obligation, to obtain the required insurance coverage on behalf of the Master Franchisee. If Bhc chooses to do so, the Master Franchisee will be responsible for covering the costs of the insurance, along with a reasonable fee to compensate Bhc for the expenses incurred in procuring the coverage.

This clause ensures that the Master Franchisee understands the importance of maintaining adequate insurance and the potential financial consequences of failing to do so. It also protects Bhc by allowing them to ensure that the business is properly insured, even if the Master Franchisee does not fulfill their obligation. The Master Franchisee is responsible for being fully covered in all areas of operating the business.

For a prospective Bhc Master Franchisee, this means that maintaining the required insurance is not just a suggestion, but a critical requirement. Failure to do so can lead to Bhc stepping in to procure insurance and charging the Master Franchisee for it, potentially adding unexpected costs. This provision highlights the need for careful attention to insurance requirements and proactive communication with Bhc to avoid any lapses in coverage.