Must the Byrider franchisee's insurance coverage extend to and provide indemnity for all obligations assumed by the franchisee under the Franchise Agreement?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
B. The insurance coverage acquired and maintained by the Franchisee at its own expense, as set forth in subsection (A) of this Section 12.1 shall:
- (1) Name the Company and its designated affiliates as additional insureds;
(2) Extend to and provide indemnity for all obligations assumed by the Franchisee hereunder and all other items for which the Franchisee is required to indemnify the Company under the provisions of this Agreement;
(3) Be primary to and non-contributory with respect to any other insurance purchased by the Company;
(4) Provide, by endorsement, that the Company is entitled to receive at least thirty (30) days prior written notice of any intent to reduce policy limits, restrict coverage, cancel or otherwise alter or amend said policy.
The Franchisee shall not reduce the policy limits, restrict coverage, cancel or otherwise alter or amend said insurance policies without the Company's written consent.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the insurance coverage that a franchisee acquires must extend to cover all obligations assumed by the franchisee under the Franchise Agreement. Specifically, the insurance must provide indemnity for these obligations and any other items for which the franchisee is required to indemnify Byrider under the agreement. This means that the franchisee's insurance policy needs to protect Byrider from any liabilities or financial responsibilities that the franchisee has agreed to in the Franchise Agreement.
In addition to covering the franchisee's obligations, the insurance policy must also name Byrider and its affiliates as additional insureds. This ensures that Byrider is directly protected by the franchisee's insurance policy. The policy must also be primary and non-contributory, meaning it pays out before any other insurance Byrider might have. Furthermore, Byrider must receive at least 30 days' written notice if the franchisee intends to reduce policy limits, restrict coverage, cancel, or alter the policy.
This requirement is in place to protect Byrider from potential liabilities arising from the franchisee's operations. It ensures that Byrider is financially covered if the franchisee fails to meet their obligations or causes harm to others. The franchisee cannot reduce coverage without Byrider's consent, giving Byrider control over maintaining adequate protection. Failure to maintain the required insurance constitutes a material breach of the Franchise Agreement, potentially leading to termination of the agreement.