What happens if an Extreme Art Studio franchisee fails to maintain the specified insurance?
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 maintain the required insurance, Extreme Art Studio has the option to obtain the insurance on behalf of the franchisee. In this case, the franchisee is obligated to cooperate with Extreme Art Studio and reimburse them for all insurance premiums paid.
In addition to reimbursing the premiums, Extreme Art Studio will charge the franchisee a fee of 20% of the premium amount to cover the costs and time incurred by Extreme Art Studio in obtaining the insurance. This fee is added to the total amount the franchisee must reimburse.
Furthermore, the FDD states that Extreme Art Studio's ability to obtain insurance on behalf of the franchisee does not limit any other remedies available to them, including the termination of the franchise agreement. Therefore, failure to maintain insurance could lead to additional penalties beyond the cost of the insurance and the 20% fee, up to and including the loss of the franchise.