Under what condition will Extreme Art Studio obtain insurance for a franchisee?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Insurance | Reimbursement of our costs, plus a 20% administration charge | On demand | If you fail to obtain insurance, we may obtain insurance for you, and you must reimburse us for the cost of insurance obtained, plus twenty percent (20%) of the premium as an administrative cost of obtaining the insurance. |
Source: Item 6 — OTHER FEES (FDD pages 13–18)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, if a franchisee fails to obtain the required insurance, Extreme Art Studio has the right to obtain insurance on behalf of the franchisee.
This is a protective measure for Extreme Art Studio, ensuring that each franchise location is adequately insured, even if the franchisee fails to fulfill this obligation. This protects the brand from potential liabilities arising from uninsured incidents at a franchise location.
If Extreme Art Studio secures insurance for a franchisee, the franchisee is responsible for reimbursing Extreme Art Studio for the full cost of the insurance premium. In addition to the premium, Extreme Art Studio will charge the franchisee an administrative fee equal to 20% of the premium amount. This fee covers Extreme Art Studio's costs associated with securing the insurance coverage. The reimbursement and administrative fee are due to Extreme Art Studio upon demand.