Under what conditions does City Wide have the right to procure insurance coverage on behalf of a franchisee?
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.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide has the right to procure insurance coverage for a franchisee if the franchisee fails to maintain the required insurance coverage as stipulated in the franchise agreement. Specifically, if a franchisee does not obtain and maintain the necessary insurance, City Wide has the authority, but not the obligation, to procure the insurance coverage on the franchisee's behalf.
If City Wide chooses to procure insurance for the franchisee, the franchisee will be charged for the coverage. This charge includes a reasonable fee to cover City Wide's expenses incurred while obtaining the insurance. The franchisee is responsible for paying these charges immediately upon receiving notice from City Wide.
Furthermore, the franchisee is obligated to promptly inform City Wide of any actual, potential, or threatened claims related to any insurance policy. City Wide retains the sole right to assume the defense of any such claim. This provision ensures that City Wide can protect its interests and manage potential liabilities associated with the franchised business's operations.