What is the franchisee's obligation if Extreme Art Studio obtains insurance on their behalf?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
If you fail or refuse to obtain and maintain the insurance we specify, in addition to our other remedies, including, without limitation, termination, we may (but need not) obtain such insurance for you and the Franchised Business on your behalf, in which event you shall cooperate with us and reimburse us for all premiums, plus a fee of twenty percent (20%) of the premium for our costs and time incurred in obtaining such insurance.
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, if a franchisee fails to obtain and maintain the specified insurance, Extreme Art Studio has the option to obtain such insurance on behalf of the franchisee's business. In this event, the franchisee is obligated to cooperate with Extreme Art Studio and reimburse them for all insurance premiums paid.
In addition to reimbursing the premiums, the franchisee must also pay Extreme Art Studio a fee amounting to twenty percent (20%) of the premium. This fee is intended to cover Extreme Art Studio's costs and time spent in securing the insurance coverage for the franchisee.
This arrangement serves as a protective measure for Extreme Art Studio, ensuring that all franchise locations maintain the required insurance levels, even if a franchisee fails to do so independently. It also highlights the importance of franchisees proactively managing their insurance obligations to avoid additional costs and potential intervention by Extreme Art Studio.