What happens if a Crawlspace Medic franchisee fails to maintain the required insurance coverage?
Crawlspace_Medic Franchise · 2024 FDDAnswer from 2024 FDD Document
tion of the required coverage. In addition, if requested by Franchisor, Franchisee shall deliver to Franchisor a copy of the insurance policy or policies required hereunder.
- 15.3. Failure to Procure. If, for any reason, Franchisee should fail to procure or maintain the insurance required by this Agreement as revised from time to time for all franchisees by the Manual or otherwise in writing, Franchisor shall have the right and authority (without, however, any obligation) to immediately procure such insurance and to charge Franchisee for the cost thereof together with a reasonable fee for Franchisor's expenses in so acting, including all attorneys' fees. Franchisee shall pay Franchisor immediately upon notice by Franchisor to Franchisee that Franchisor has undertaken such action and the cost thereof.
- 15.4.Increase in Coverage**.** The levels and types of insurance stated herein are minimum requirements. Franchisor reserves the right to raise the required minimum requirements for any type of insurance or add additional types of insurance requirements, as Franchisor deems reasonably prudent to require. Within thirty (30) days of any such required new limits or types of coverage, Franchisee must submit proof to Franchisor of Franchisee's coverage pursuant to Franchisor's requirements.
- 15.5.Additional Insured. All required insurance policies shall name Franchisor and their affiliates and their members, officers, agents and employees as additional insureds as their interests may appear.
Source: Item 22 — CONTRACTS (FDD page 42)
What This Means (2024 FDD)
According to the 2024 Crawlspace Medic Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Crawlspace Medic has the right, but not the obligation, to procure the insurance themselves. The franchisee is then responsible for covering the cost of the insurance, along with a reasonable fee to cover Crawlspace Medic's expenses, including attorney's fees. The franchisee must pay Crawlspace Medic immediately after receiving notice of this action and its associated costs.
Crawlspace Medic also reserves the right to increase the minimum insurance requirements or add additional types of insurance coverage as they deem necessary. Franchisees must provide proof of coverage meeting these new requirements within 30 days of notification. All insurance policies must name Crawlspace Medic and its affiliates, members, officers, agents, and employees as additional insureds. Public liability policies must include a provision ensuring that additional insureds can recover under the policy for losses caused by the franchisee or their staff, even though they are named as insureds.
This clause protects Crawlspace Medic from potential liabilities arising from the franchisee's operations. By allowing Crawlspace Medic to procure insurance on behalf of a non-compliant franchisee, the system ensures continuous coverage, safeguarding both the franchisee's business and the franchisor's brand reputation. The franchisee's responsibility for all costs, including fees and legal expenses, underscores the importance of maintaining adequate insurance coverage as a fundamental obligation of the franchise agreement.