Is an Extreme Art Studio franchisee required to indemnify for claims arising from their employment relationships?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
2 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.
- 8.6.2 Actual types and amounts of coverage are subject to change, and certain types of coverage may differ depending on the type of Extreme Art Studio Business you operate. We reserve the right to require that you obtain all or a portion of your insurance policies from a designated vendor. The liability insurance must cover claims for bodily and personal injury, death, and property damage caused by or occurring in connection with the Franchised Business's operation or activities of your personnel in the course of their employment (within and outside the Franchised Business). All of these policies must contain the minimum coverage we prescribe from time to time, where you operate the Franchised Business, and must have deductibles not to exceed the amounts we specify.
- 8.6.3 We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverage (including reasonable excess liability insurance) at any time to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
- 8.6.4 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). The insurance company must be authorized to do business in the state where your Extreme Art Studio Business is located and must be approved by us.
- 8.6.5 Each insurance policy (except for employment liability insurance policies) must name us and any affiliates we designate as additional named insureds and provide for 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. Prior to commencing any renovations or construction at the Extreme Art Studio Business, you will provide us with a certificate of insurance for the builder's risk insurance required.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, franchisees are required to carry liability insurance that covers claims for bodily and personal injury, death, and property damage caused by or occurring in connection with the Franchised Business's operation or activities of your personnel in the course of their employment (within and outside the Franchised Business).
Extreme Art Studio also requires that the franchisee and Extreme Art Studio understand and agree that the Franchise Agreement does not create a fiduciary relationship between them, and that they are and will be independent contractors. The franchisee agrees to identify themselves conspicuously as the Franchised Business's owner under a franchise granted by Extreme Art Studio in all public records, on letterhead and business forms, and in all dealings with customers, suppliers, public officials, Extreme Art Studio Business personnel and others. Upon Extreme Art Studio's request, the franchisee and each of their employees will sign an employment acknowledgment form stating that the franchisee alone is the employer and operates the Franchised Business.
Extreme Art Studio and the franchisee may not make any express or implied agreements, warranties, guarantees or representations, or incur any debt in the name or on behalf of the other, or represent that their respective relationship is other than franchisor and franchise owner. Extreme Art Studio will not be obligated for any damages to any person or property directly or indirectly arising out of the Franchised Business's operation or the business the franchisee conducts under the Franchise Agreement.
While the franchisee is required to maintain certain insurance coverages, the FDD does not explicitly state that the franchisee must indemnify Extreme Art Studio for claims arising from the franchisee's employment relationships. It is important for a prospective franchisee to clarify this point with Extreme Art Studio to fully understand their responsibilities and potential liabilities related to employment-related claims.