If a Fitstop franchisee fails to obtain the required insurance, can Fitstop obtain the insurance on their behalf?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
If you fail to obtain insurance and keep the same in full force and effect, we may obtain this insurance at our discretion, and you will pay us the premium costs upon our demand. Failure to obtain and maintain the required insurance constitutes a material breach of the franchise agreement entitling us to terminate the agreement. You must also procure and pay for all other insurance required by state or federal law. We may periodically increase the amount of coverage required and/or require different or additional coverage. We do not derive revenue as a result of your purchase of insurance.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–23)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee fails to obtain and maintain the required insurance, Fitstop has the discretion to obtain the insurance on the franchisee's behalf. If Fitstop chooses to do so, the franchisee is responsible for paying the premium costs upon demand.
This is a fairly standard clause in franchise agreements. It protects Fitstop from potential liabilities arising from a franchisee's operation. By allowing Fitstop to secure insurance coverage, the brand ensures that both the franchisee and Fitstop itself are protected against potential financial losses due to accidents, injuries, or other unforeseen events.
Failure to obtain and maintain the required insurance constitutes a material breach of the franchise agreement, which could lead to termination of the agreement. This underscores the importance of franchisees adhering to the insurance requirements outlined by Fitstop. Franchisees should ensure they understand the minimum insurance policies required and maintain them throughout the term of the franchise agreement.