What notice must an insurance company provide to Buona Franchisor before canceling, modifying, or changing a franchisee's insurance policy?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
All such policies of insurance shall be placed with an insurance company that has a claims rating ability of at least A- from A.M. Best and shall provide that the same shall not be canceled, modified or changed without first giving thirty (30) days' prior written notice thereof to Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the insurance company must provide Buona with thirty (30) days prior written notice before canceling, modifying, or changing a franchisee's insurance policy. This requirement ensures that Buona is informed of any changes to the franchisee's insurance coverage, allowing them to take necessary actions to maintain adequate protection for both the franchisee and the franchisor.
This notification period is crucial for Buona to verify that the franchisee remains compliant with the insurance requirements outlined in the franchise agreement. If a policy is canceled or altered, Buona can ensure the franchisee obtains replacement coverage promptly. This protects Buona from potential liabilities and financial risks associated with underinsured or uninsured franchisees.
This requirement is a fairly standard practice in franchising, as franchisors typically need to ensure that franchisees maintain adequate insurance coverage to protect the brand and the entire franchise system from potential liabilities. The 30-day notice period allows Buona sufficient time to address any insurance gaps and enforce compliance with its insurance requirements. This proactive approach helps mitigate risks and maintain the integrity of the Buona franchise system.