Under what circumstances is a Bhc franchisee considered in material breach of the Franchise Agreement regarding insurance?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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's failure to procure and maintain the required insurance coverage is considered a material breach of the Franchise Agreement. This means that if a Bhc franchisee does not obtain and keep the insurance coverage that Bhc requires, it will be considered a significant violation of the agreement.
Bhc requires the insurance certificate to include a statement that it cannot be canceled without providing 30 days' prior written notice to both the franchisee and Bhc. The franchisee is also obligated to immediately notify Bhc in writing about any cancellation, non-renewal, or reduction in coverage or limits.
If a franchisee fails to maintain the required insurance, Bhc has the option, but not the obligation, to procure insurance coverage on behalf of the franchisee. In such cases, the franchisee will be charged for the cost of the insurance, along with a reasonable fee to cover Bhc's expenses. This highlights the importance of maintaining continuous and adequate insurance coverage as mandated by Bhc to avoid potential breaches of the agreement and additional costs.