Is builders' risk insurance required for an Extreme Art Studio franchise, and under what circumstances?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
ed Manager, if any. You are not required to directly manage and train the teachers; however, you must at all times have a Designated Manager (if someone other than you) who must have satisfactorily completed our Initial Training Program.
8.6 INSURANCE.
- 8.6.1 During the term of this Franchise Agreement, you must maintain in force at your sole expense insurance coverage we require, including:
- (a) comprehensive general liability insurance with minimum limits of $1,000,000 per occurrence and at least $2,000,000 aggregate;
- (b) automobile liability including owned (if applicable), hired and non-owned vehicle coverage and property damage liability with at least $1,000,000 combined single limit, and $1,000,000 general aggregate limit;
- (c) product liability insurance with limits of at least $2,000,000 general aggregate including the following coverages: personal injury (employee and contractual inclusion deleted); products/completed operation; assault and battery; terrorism; and tenant's legal liability with limits of at least $300,000;
- (d) builders' risk during renovation and/or construction;
- (e) worker's compensation and employers' liability insurance of $500,000/$500,000; abuse and molestation coverage of at least $1,000,000 per occurrence;
- (f) excess liability coverage of at least $1,000,000;
- (g) all risk coverage insurance on (i) all personal property covering the Extreme Art Studio Business and contents thereof, including, without limitation, all supplies, inventory, fixtures, and equipment, containing a replacement value endorsement in an amount equal to the full replacement value thereof; and (ii) business interruption insurance for actual loss the Extreme Art Studio Business sustains for 12 months, or not less than fifty percent (50%) of annual Net Sales; and
- (h) other types of insurance, in the amounts required by applicable law, rule, regulation, ordinance or licensing requirements or your lease, if applicable.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, builders' risk insurance is required during renovation and/or construction. Franchisees must furnish Extreme Art Studio with a certificate of insurance for the builder's risk insurance before commencing any renovations or construction at the Extreme Art Studio Business.
Extreme Art Studio franchisees are required to maintain various insurance coverages during the term of the Franchise Agreement. These include comprehensive general liability insurance with minimum limits of $1,000,000 per occurrence and at least $2,000,000 aggregate; automobile liability insurance with at least $1,000,000 combined single limit and $1,000,000 general aggregate limit; and product liability insurance with limits of at least $2,000,000 general aggregate.
Other required insurance includes worker's compensation and employers' liability insurance of $500,000/$500,000, abuse and molestation coverage of at least $1,000,000 per occurrence, excess liability coverage of at least $1,000,000, and all-risk coverage insurance on personal property and business interruption. The actual types and amounts of coverage are subject to change and may differ depending on the type of Extreme Art Studio Business operated. Extreme Art Studio retains the right to increase coverage amounts or require additional insurance at any time.
All insurance policies must be purchased from licensed insurers with a rating of "A/VIII" or higher by A.M. Best Company and must be authorized to do business in the state where the Extreme Art Studio Business is located and approved by Extreme Art Studio. Each policy (except employment liability insurance) must name Extreme Art Studio as an additional named insured and provide 30 days' prior written notice of any material modification, cancellation, or expiration. Franchisees must provide copies of insurance certificates at least 30 days prior to opening and as routinely requested by Extreme Art Studio.