If Extreme Art Studio obtains insurance on behalf of a franchisee, what fees are charged?
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 insurance on behalf of the franchisee. In such cases, the franchisee is responsible for reimbursing Extreme Art Studio for all insurance premiums paid.
In addition to reimbursing the premiums, Extreme Art Studio will charge the franchisee a fee equivalent to twenty percent (20%) of the premium amount. This fee is intended to cover Extreme Art Studio's costs and time incurred in securing the insurance coverage for the franchisee.
This policy ensures that the Franchised Business remains compliant with insurance requirements, protecting both the franchisee and Extreme Art Studio from potential liabilities. However, it also means that the franchisee will incur additional costs beyond the standard insurance premium if Extreme Art Studio has to step in to obtain coverage.