If Fitstop purchases insurance on behalf of a franchisee, how will Fitstop be compensated?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 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.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, if a franchisee fails to obtain the required insurance coverage, Fitstop has the option, but not the obligation, to purchase the insurance. If Fitstop exercises this option, it can recover the cost of the insurance by deducting the amount from any payments made to the franchisee.
This means that Fitstop franchisees must maintain the insurance coverage required by federal, state, and local laws, as well as the franchise agreement. Franchisees must also provide Fitstop with evidence of payment of premiums and duplicate copies of the insurance policies at least 30 calendar days before opening for business or 30 calendar days before the expiration date of an existing policy. The insurance policies must be in effect before the franchisee begins servicing members.
Fitstop can relieve itself of the obligation to purchase and administer the insurance coverage by giving the franchisee 10 calendar days written notice. The FDD also states that the required insurance limits may be increased, or new types of coverage may be added, based on changes in federal, state, and local laws or other circumstances. This places the onus on the franchisee to stay compliant with insurance requirements, and gives Fitstop the ability to ensure compliance, at the franchisee's expense, if the franchisee fails to do so.