What right does Canopy Lawn Care reserve regarding the franchisee's required insurance policies?
Canopy_Lawn_Care Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) Franchisee shall provide Franchisor with original or duplicate copies of all insurance policies, including endorsements, or other proof of insurance acceptable to Franchisor evidencing coverage required by this Section, together with proof of payment within 10 days of issuance thereof.
Franchisee shall also furnish Franchisor with all proof of insurance coverage required by this Section, including endorsements, within 10 days after any of the following events: (a) all policy renewals, but not less often than annually, and (b) all instances of any change to, addition to, or replacement of any insurance.
The policies and endorsements for each insurance policy are to be signed by a person authorized by that insurer to bind coverage on its behalf.
All proof of insurance is subject to approval by Franchisor.
Franchisor reserves the right to require complete, certified copies of all required insurance policies at any time in Franchisor's sole discretion.
- (d) In the event Franchisee fails to obtain the required insurance and to keep the same in full force and effect, Franchisor may, but shall not be obligated to, purchase insurance on Franchisee's behalf from an insurance carrier of Franchisor's choice, and Franchisee shall reimburse Franchisor for the full cost of such insurance, along with a reasonable service charge to compensate Franchisor for the time and effort expended to secure such insurance, within 5 days after the date Franchisor delivers an invoice detailing such costs and expenses to Franchisee.
Notwithstanding the foregoing, failure of Franchisee to obtain insurance constitutes a material breach of this Agreement entitling Franchisor to terminate this Agreement or exercise any or a combination of the other default remedies set forth in Section 17 of this Agreement.
- (e) Franchisee's obligation to obtain and maintain insurance coverage in the amounts required by Franchisor shall not be limited in any way by reason of any insurance that Franchisor may maintain, nor does Franchisee's procurement of required insurance relieve Franchisee of liability under the indemnity obligations described in Section 12.2.
Franchisee's insurance procurement obligations under this Section are separate and independent of Franchisee's indemnity obligations.
Source: Item 22 — CONTRACTS (FDD page 55)
What This Means (2025 FDD)
According to Canopy Lawn Care's 2025 Franchise Disclosure Document, Canopy Lawn Care maintains several rights regarding a franchisee's insurance policies. Canopy Lawn Care reserves the right to approve all proof of insurance provided by the franchisee. Additionally, Canopy Lawn Care can request complete, certified copies of all required insurance policies at any time, at their sole discretion.
If a franchisee fails to obtain and maintain the required insurance, Canopy Lawn Care has the option, but not the obligation, to purchase insurance on behalf of the franchisee from an insurance carrier of their choosing. In this case, the franchisee is responsible for reimbursing Canopy Lawn Care for the full cost of the insurance, along with a reasonable service charge to compensate Canopy Lawn Care for securing the insurance. This reimbursement must be made within 5 days of receiving an invoice detailing the costs and expenses.
The FDD specifies that failure to obtain the required insurance constitutes a material breach of the Franchise Agreement. This gives Canopy Lawn Care the right to terminate the agreement or pursue other default remedies outlined in Section 17 of the agreement. The franchisee's obligation to maintain insurance coverage is not limited by any insurance Canopy Lawn Care may maintain, and the franchisee's insurance procurement obligations are separate from their indemnity obligations.
These stipulations are fairly standard in franchising, as franchisors need to protect their brand and network from potential liabilities. Prospective Canopy Lawn Care franchisees should carefully review the insurance requirements and ensure they can comply to avoid potential penalties or termination of their franchise agreement.