Under what circumstances can CJR procure insurance on behalf of a Carls franchisee, and how will the franchisee be charged?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- F. Should Franchisee, for any reason, fail to procure or maintain at least the insurance required by this Section 15, as revised from time to time pursuant to the OPM or otherwise in writing, CJR shall have the immediate right and authority, but not the obligation, to procure such insurance and charge its cost to Franchisee.
All out-of-pocket costs incurred by CJR in obtaining such insurance on behalf of Franchisee shall be reimbursed to CJR by Franchisee immediately upon Franchisee's receipt of an invoice therefor.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, CJR, the franchisor, has the right to procure insurance on behalf of a franchisee if the franchisee fails to obtain or maintain the required insurance. This ensures that all Carls locations meet the minimum insurance standards set by the franchisor.
If a franchisee fails to maintain the required insurance, CJR has the immediate right, but not the obligation, to procure the necessary insurance. The franchisee will then be charged for the cost of this insurance.
The franchisee is responsible for reimbursing CJR for all out-of-pocket costs incurred by CJR in obtaining the insurance. This reimbursement is due immediately upon the franchisee's receipt of an invoice from CJR. This arrangement ensures that the franchisee bears the financial responsibility for maintaining adequate insurance coverage, while also allowing CJR to protect its brand and interests by stepping in when a franchisee fails to do so.