Does Buona's insurance coverage limit the franchisee's obligation to obtain and maintain the required insurance policies?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 12.5 No Limitation on Coverage. Franchisee's obligation to obtain and maintain the foregoing policy or policies of insurance in the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by Franchisor, nor shall Franchisee's performance of that obligation relieve it of liability under the indemnity provisions set forth in Article XIV of this Agreement.
- 12.6 Issuance of Insurance. Franchisee must obtain the insurance required by this Agreement no later than fifteen (15) days before the date on which any construction or build-out at the premises of the Franchised Business is commenced. The Franchised Business shall not be opened for business prior to Franchisor's receipt of satisfactory evidence that all insurance required by this Agreement is in effect. Upon obtaining such insurance, and on each policy renewal date thereafter, Franchisee shall promptly submit evidence of satisfactory insurance and proof of payment therefore to Franchisor, together with, upon request, copies of all policies and policy amendments. The evidence of insurance shall include a statement by the insurer that the policy or policies will not be canceled or materially altered without at least thirty (30) days' prior written notice to Franchisor.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchisee's obligation to obtain and maintain insurance policies is not limited by any insurance that Buona may maintain. The franchisee is fully responsible for securing and maintaining the required insurance coverage in the specified amounts, regardless of any insurance coverage held by Buona. This means that even if Buona has its own insurance policies, the franchisee must still obtain and maintain their own separate policies as outlined in the Franchise Agreement.
Buona requires the franchisee's insurance to be the primary coverage. If Buona's insurance has to make any payments before the franchisee's coverage limits are exhausted, the franchisee is responsible for reimbursing and indemnifying Buona and its insurers for those payments. This reinforces that the franchisee's insurance is the first line of defense in covering any potential liabilities.
This requirement protects Buona from potential liabilities arising from the franchisee's operations. It also ensures that the franchisee is adequately insured, which can safeguard their business against unforeseen events and potential financial losses. Franchisees must ensure they fully understand and comply with all insurance requirements to avoid being in breach of their Franchise Agreement and to protect their investment.