Is the Fitstop franchisor obligated to purchase insurance if the franchisee fails to do so?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
olders Rating of "A+" or "A", as assigned by Alfred M. Best and Company, Inc., unless the we approve otherwise.
- 8.3 In the event you shall fail to obtain such insurance with such coverages as the federal, state, and local law as well as this Agreement requires, we may, but are not obligated to, purchase said insurance, deducting these amounts from any payments made to you. We may relieve ourself of all obligations with respect to the purchase and administration of such insurance coverage by giving 10 calendar days written notice to you.
- 8.4 The various limits of the insurance that federal, state, and local law as well as this Agreement requires may be increased or circumstances may dictate that you add new types of coverage.
Section 9: Securing Approved Premises
9.1 Obligation to Secure an Approved Premises
- 9.1.1 Unless we have already agreed upon a location for the Premises at the time we execute this Agreement, you must use your best efforts to locate and enter into a lease agreement for a Premises within the Designated Territory that we approve within six (6) months of the Effective Date. As part of that process, it is your responsibility to: (i) inspect prospective premises; (ii) report back to us on a weekly basis with details of the prospective premises inspected in the prior seven (7) calendar days; (iii) consider any potential premises we may suggest; and (iv) if we deem necessary, engage an agent we approve to assist you in locating an appropriate premises within the Designated Territory.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop is not obligated to purchase insurance on behalf of a franchisee if the franchisee fails to obtain the required insurance coverage. However, Fitstop has the option to do so.
If a Fitstop franchisee fails to secure the necessary insurance as required by federal, state, and local laws, as well as the franchise agreement, Fitstop has the right, but not the obligation, to purchase the insurance. If Fitstop chooses to purchase the insurance, it can deduct the cost of the insurance premiums from any payments owed to the franchisee.
Fitstop can also relieve itself of all obligations related to purchasing and administering the insurance coverage by providing the franchisee with 10 calendar days' written notice. This means that while Fitstop can step in to ensure coverage is in place, it is ultimately the franchisee's responsibility to maintain the required insurance. The franchisee must also provide evidence of payment of premiums and duplicate copies of policies to Fitstop no less than 30 calendar days prior to opening for business and/or 30 calendar days prior to the expiration date of an existing policy. The insurance policies must be in effect on or prior to the date that the franchisee begins servicing members. The insurer must give written notice to Fitstop no less than 30 calendar days prior to any cancellations of or material changes to the policy and include a waiver of subrogation favoring Fitstop, its officers, and its directors.