If Browns Chicken obtains insurance on behalf of a franchisee, is the franchisee required to cooperate?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
If Franchisee fails or refuses to maintain required insurance coverage or to furnish satisfactory evidence thereof and the payment of the premiums therefor, Brown, at its option and in addition to its other rights and remedies hereunder, may obtain such insurance coverage on behalf of Franchisee and Franchisee shall fully cooperate with Brown in its effort to obtain such insurance policies, promptly execute all forms or instruments required to obtain or maintain any such insurance, allow any inspections of the Store which are required to obtain or maintain such insurance and pay to Brown, on demand, any costs and premiums incurred by Brown. In the event Brown obtains Franchisee's insurance pursuant to this paragraph, Brown may withdraw the monthly costs of insurance, plus an additional ten percent (10%) administration fee, from Franchisee's bank account, through Franchisee's Bank Draft Plan established pursuant to Paragraph 19.F.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance coverage, Browns Chicken has the option to obtain the insurance on behalf of the franchisee. In this case, the franchisee is required to fully cooperate with Browns Chicken in their effort to secure the insurance policies.
This cooperation includes promptly completing all necessary forms or instruments, allowing any required inspections of the store, and paying all costs and premiums incurred by Browns Chicken. Browns Chicken can withdraw the monthly insurance costs, along with an additional 10% administration fee, directly from the franchisee's bank account through the Bank Draft Plan.
This clause ensures that Browns Chicken can maintain consistent insurance coverage across all franchise locations, protecting both the brand and individual franchisees from potential liabilities. The 10% administration fee could cover Browns Chicken's administrative costs in managing the insurance on behalf of the franchisee. It is important for prospective franchisees to understand these obligations and potential costs associated with non-compliance of insurance requirements.