What happens if a Devon Creek franchisee fails to procure or maintain the required insurance?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
chisor, 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 an administrative fee of ten percent (10%) for Franchisor's expenses in so acting, including all attorneys' fees.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, if a franchisee fails to procure or maintain the required insurance, Devon Creek has the right, but not the obligation, to procure the insurance on behalf of the franchisee. The franchisee will then be charged for the cost of the insurance, along with an administrative fee of 10% to cover Devon Creek's expenses, including attorney's fees. The franchisee is required to pay Devon Creek immediately upon receiving notice of this action and the associated costs.
This provision ensures that all Devon Creek franchises maintain the necessary insurance coverage to protect both the franchisee and the franchisor from potential liabilities. By allowing Devon Creek to procure insurance on behalf of a non-compliant franchisee, the system maintains consistent coverage and reduces the risk of uninsured incidents. The 10% administrative fee acts as a deterrent and compensates Devon Creek for the time and resources spent in securing the insurance.
For a prospective Devon Creek franchisee, this means that maintaining the required insurance is crucial. Failure to do so not only puts the franchisee at risk but also incurs additional costs in the form of the 10% administrative fee. It is important for franchisees to understand the insurance requirements outlined in the Franchise Agreement and to ensure they remain compliant throughout the term of the agreement. This includes promptly providing Devon Creek with current Certificates of Insurance as evidence of coverage and understanding that Devon Creek can increase the minimum insurance requirements at any time.