Can Fitstop periodically increase the amount of insurance coverage required for a Fitstop franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
These insurance coverage requirements are only minimums. You need to make an independent determination as to whether increased amounts or additional types of insurance are appropriate.
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, Fitstop has the right to periodically increase the amount of required insurance coverage and/or require different or additional coverage. Franchisees are responsible for obtaining and maintaining the required insurance policies throughout the entire term of the franchise agreement.
The FDD specifies minimum insurance policies that a Fitstop franchisee must maintain. These include Comprehensive General Liability ($2,000,000 General Aggregate, $2,000,000 Products/Completed Operations, and $1,000,000), Business Automobile Liability ($1,000,000 per Occurrence), Excess or Umbrella Insurance ($5,000,000 per Occurrence & Aggregate), Workers Compensation Insurance (Statutory Limits), and Employment Practices Liability Insurance ($1,000,000/$1,000,000/$1,000,000). Additionally, Employee Dishonesty/"3-D"/Comprehensive Crime Insurance requires $300,000 per occurrence.
Fitstop also requires that the insurance policies cover both the franchisee and Fitstop, including its officers, directors, and nominees, as additional insured parties. The policies must provide Fitstop with a 30-day written notice of cancellation, modification, or termination. Franchisees must furnish Fitstop with copies or certificates of insurance within 30 days of issuance. While Fitstop sets minimum coverage requirements, franchisees should independently determine if higher amounts or additional insurance types are necessary.
Failure to maintain the required insurance constitutes a material breach of the franchise agreement, potentially leading to termination. Fitstop retains the option to obtain the necessary insurance if a franchisee fails to do so, with the franchisee responsible for covering the premium costs upon demand. The FDD states that Fitstop does not receive revenue from franchisee insurance purchases.