When is the Failure to Maintain Insurance fee due for a Cinch I.T. franchise?
Cinch_I_T Franchise · 2024 FDDAnswer from 2024 FDD Document
onths 25-60 | $1,000 |
| TYPE OF FEE1 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| exclusive supplier for certain products. Frequency of purchase is based on Client demand. | |||
| Helpdesk Client Managed Services Fees | Monthly Fees range between $5 and $90 based on service provided, number of users and equipment supported. | 15th day of each month or other day of the month we periodically designate by EFT | Payable to us or our designee, Cinch HD. We reserve the right to adjust this fee as further described in Note 4 below. |
| Product Testing Fee | The greater of $500 or the actual cost of our review and/or inspection, including the actual cost of laboratory fees, professional fees and travel and living expenses as well as any other fees we pay to third parties. | When billed | |
| Failure to Maintain Insurance | Cost of insurance and, if not obtained by you, our procurement expense. | As required and as incurred | Payable upon your failure to comply with the Franchise Agreement. |
| Annual Conference Registration Fee | Up to $700 per person | On demand | You must pay us a registration fee, which we expect will not be more than $700 per person, for attending our annual conference. We require you (or your Operating Principal), and/or your general manager to attend each conference. You will be responsible for all travel and living expenses incurred by you and your personnel for attendance at the annual conference. |
| Client Complaints | Reimbursement of our time and expenses plus any compensation paid | As incurred | If we step in to |
Source: Item 6 — OTHER FEES (FDD pages 14–20)
What This Means (2024 FDD)
According to the 2024 Cinch I.T. Franchise Disclosure Document, the Failure to Maintain Insurance fee is due 'as required and as incurred' and is payable upon your failure to comply with the Franchise Agreement. This fee covers the cost of insurance and Cinch I.T.'s expenses if they have to procure the insurance themselves because the franchisee failed to do so.
In practical terms, this means a Cinch I.T. franchisee must maintain the required insurance coverage throughout the term of the agreement. If the franchisee lets their insurance lapse or fails to obtain the necessary coverage, Cinch I.T. can step in to secure the insurance and charge the franchisee for the cost. This includes both the insurance premium and any expenses Cinch I.T. incurs in obtaining the coverage.
The 'as required and as incurred' aspect means the fee isn't a fixed amount or a regularly scheduled payment. Instead, it's triggered specifically by the franchisee's failure to maintain adequate insurance. The franchisee will be responsible for reimbursing Cinch I.T. promptly once these costs are incurred. Maintaining proper insurance is a standard requirement in franchising to protect both the franchisee and franchisor from potential liabilities.
It is important for a prospective Cinch I.T. franchisee to fully understand the insurance requirements outlined in the Franchise Agreement. Failing to comply with these requirements can result in unexpected expenses and potential breaches of the agreement. Franchisees should proactively manage their insurance coverage to avoid incurring this fee.