Must each insurance policy contain a waiver of subrogation rights against Extreme Art Studio?

According to Extreme Art Studio's 2024 Franchise Disclosure Document, each insurance policy (except for employment liability insurance policies) must include a waiver of all subrogation rights against Extreme Art Studio, its affiliates, and their successors and assigns. This requirement ensures that Extreme Art Studio is protected from claims made by the franchisee's insurance company.

In practical terms, this means that if a franchisee's insurance company pays out a claim to the franchisee due to an incident for which Extreme Art Studio might also be liable, the insurance company cannot then sue Extreme Art Studio to recover the money they paid out. This waiver is a common practice in franchising to shield the franchisor from potential liabilities arising from the franchisee's operations.

This requirement is part of a broader set of insurance obligations that Extreme Art Studio imposes on its franchisees, including specific coverage types and minimum coverage amounts. Franchisees must also name Extreme Art Studio as an additional insured on most policies and provide them with 30 days' notice of any material modification, cancellation, or expiration of the policies. Ensuring compliance with these insurance requirements is the franchisee's responsibility, and failure to do so could result in the franchisor obtaining the insurance on the franchisee's behalf, with the franchisee bearing the costs plus a 20% fee.