Is Clean Your Dirty Face obligated to obtain insurance for a franchisee who fails to do so?
Clean_Your_Dirty_Face Franchise · 2025 FDDAnswer from 2025 FDD Document
8.L. INSURANCE.
During the term of this Agreement you must maintain in force at your sole expense comprehensive public liability, general liability, personal injury liability, motor vehicle liability, property, product liability, workmen's compensation, employment practices liability, commercial liability umbrella, business interruption insurance, and other types of insurance we require. We reserve the right to require that you obtain all or a portion of your insurance policies from a designated vendor and on the terms and according to the specifications we approve. The liability insurance must cover claims for bodily and personal injury, death, and property damage caused by or occurring in connection with your Business's operation or activities of your personnel in the course of their employment (within and outside your Business and the Premises). All of these policies must contain the minimum coverage we prescribe from time to time, and must have deductibles not to exceed the amounts we specify. We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverages (including reasonable excess liability insurance) at any time. These insurance policies must be purchased from licensed insurers having a rating of "A-/VIII" or higher by the then-current edition of Best Insurance Reports published by A.M. Best Company (or other similar publication or criteria we designate).
Each insurance policy for liability coverage must name us and any affiliates we designate as additional named insureds and provide for thirty (30) days' prior written notice to us of a policy's material modification, cancellation or expiration. Each insurance policy must contain a waiver of all subrogation rights against us, our affiliates and their successors and assigns. You must routinely furnish us copies of your Certificates of Insurance or other evidence of your maintaining this insurance coverage and paying premiums. If you fail or refuse to obtain and maintain the insurance we specify, in addition to our other remedies including termination, we may (but are not required to) obtain such insurance for you and your Business on your behalf, in which event you agree to cooperate with us and reimburse us for all premiums, costs and expenses we incur in obtaining and maintaining the insurance, plus a reasonable fee for our time incurred in obtaining such insurance.
Source: Item 22 — CONTRACTS (FDD page 54)
What This Means (2025 FDD)
According to Clean Your Dirty Face's 2025 Franchise Disclosure Document, franchisees are required to maintain various insurance policies during the term of the Franchise Agreement, including comprehensive public liability, general liability, personal injury liability, motor vehicle liability, property, product liability, workmen's compensation, employment practices liability, commercial liability umbrella, and business interruption insurance. Clean Your Dirty Face also reserves the right to require franchisees to obtain these policies from a designated vendor and according to specifications approved by Clean Your Dirty Face.
The liability insurance must cover claims for bodily and personal injury, death, and property damage related to the franchisee's business operations or the activities of their personnel. These policies must meet minimum coverage amounts prescribed by Clean Your Dirty Face and have deductibles not exceeding specified amounts. Clean Your Dirty Face may periodically increase coverage requirements or require different or additional insurance coverages. All insurance policies must be purchased from licensed insurers with a rating of "A-/VIII" or higher by A.M. Best Company.
Each liability insurance policy must name Clean Your Dirty Face and any designated affiliates as additional named insureds and provide thirty days' prior written notice of any material modification, cancellation, or expiration. The policies must also include a waiver of subrogation rights against Clean Your Dirty Face and its affiliates. Franchisees are required to provide Clean Your Dirty Face with copies of their Certificates of Insurance or other evidence of maintaining coverage and paying premiums.
While franchisees are responsible for securing their own insurance, if a franchisee fails to maintain the required insurance, Clean Your Dirty Face has the option, but not the obligation, to obtain such insurance on the franchisee's behalf. In such cases, the franchisee must cooperate with Clean Your Dirty Face and reimburse all premiums, costs, and expenses incurred, plus a reasonable fee for Clean Your Dirty Face's time in obtaining the insurance.