What waiver must each insurance policy contain regarding subrogation rights for an Extreme Art Studio?

According to Extreme Art Studio's 2024 Franchise Disclosure Document, each insurance policy that a franchisee obtains must contain a waiver of all subrogation rights against Extreme Art Studio, its affiliates, and their successors and assigns. This requirement is in place to protect Extreme Art Studio from potential claims or lawsuits where the insurance company might try to recover payments they made to the franchisee due to a loss.

In practical terms, this means that if a franchisee experiences a covered loss (e.g., property damage, liability claim), and their insurance company pays out on that claim, the insurance company cannot then turn around and sue Extreme Art Studio to recover those payments. The waiver prevents the insurance company from stepping into the franchisee's shoes to pursue a claim against Extreme Art Studio. This is a fairly standard practice in franchising to shield the franchisor from liability related to the franchisee's operations.

This requirement necessitates that franchisees carefully review their insurance policies to ensure this waiver is included. Failure to include this waiver could result in the franchisee being in breach of the franchise agreement. Franchisees should also confirm that their insurance carrier is aware of this requirement and can provide the necessary documentation to demonstrate compliance. Extreme Art Studio also requires to be named as an additional insured on each policy and to be notified 30 days prior to any cancellation, expiration, or material change of the policy.