What are the specific consequences if a City Wide franchisee fails to maintain the required insurance?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.4 Should Franchisee, for any reason, not procure and maintain such insurance coverage as required by this Agreement, CITY WIDE will have the right and authority (without, however, any obligation to do so) immediately to procure such insurance coverage and to charge Franchisee for such coverage, which charges, together with a reasonable fee for expenses incurred by CITY WIDE in connection with such procurement, will be payable by Franchisee immediately upon notice.
Franchisee will promptly notify CITY WIDE of any actual, potential, or threatened claim under any such insurance policy, and will permit CITY WIDE at CITY WIDE's sole and absolute right, to assume the defense of any such claim.
SECTION 18. Taxes, Permits, and Indebtedness
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance coverage, City Wide has the right, but not the obligation, to procure the necessary insurance coverage on behalf of the franchisee. The franchisee is then responsible for immediately paying City Wide for the cost of this insurance, along with a reasonable fee to cover City Wide's expenses incurred in obtaining the coverage.
This means that a City Wide franchisee cannot let their insurance lapse. If they do, City Wide can step in to ensure coverage is in place, protecting both the franchisee and City Wide from potential liabilities. The franchisee will be billed for the insurance costs and any associated fees charged by City Wide.
Furthermore, failure to maintain insurance and failure to make payments to remedy operational deficiencies can be considered a material breach of the franchise agreement, which could lead to termination of the agreement by City Wide. This underscores the importance of maintaining continuous and adequate insurance coverage as required by City Wide to avoid potential financial burdens and the risk of losing the franchise.