Under the Fitstop franchise agreement, are Fitstop or its designees required to financially contribute to or be liable for the insurance coverage provided by the franchisee?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 8.2.2 You shall provide evidence of payment of premiums of the aforementioned insurance policies and duplicate copies of policies to us no less than 30 calendar days prior to the date that you open for business and/or 30 calendar days prior to the expiration date of an existing policy of insurance.
- 8.2.3 Your insurance policies shall be in effect on or prior to the date that you begin servicing members.
- 8.2.4 You shall cause the insurer to include as a provision in all insurance policies that the insurer must give written notice to us no less than 30 calendar days prior to any cancellations of or material changes to the policy.
- 8.2.5 You shall cause the insurer to include as a provision in all insurance policies a waiver of subrogation favoring us, our officers, and our directors.
- 8.2.6 You shall obtain all insurance policies from a reputable insurance company licensed to do business in the state in which your Franchise is located and having a Financial Size Category equal to or greater than IX and Policyholders 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.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, franchisees are responsible for securing and maintaining their own insurance coverage. Fitstop does not contribute to or share liability for this insurance, but they do have specific requirements to ensure adequate protection for both parties.
The Fitstop franchisee must provide evidence of premium payments and copies of the insurance policies to Fitstop at least 30 calendar days before opening or before the expiration of an existing policy. The insurance must be in effect before the franchisee begins servicing members. The insurance policies must include a provision that the insurer will notify Fitstop in writing at least 30 calendar days before any cancellations or material changes to the policy. Additionally, the policies must include a waiver of subrogation favoring Fitstop, its officers, and directors.
The franchisee must obtain insurance from a reputable company licensed in the state where the franchise is located, with a Financial Size Category of IX or greater and a Policyholders Rating of "A+" or "A" from Alfred M. Best and Company, Inc., unless Fitstop approves otherwise. However, if the franchisee fails to obtain the required insurance, Fitstop has the option, but not the obligation, to purchase the insurance and deduct the costs from any payments made to the franchisee. Fitstop can also relieve itself of this obligation by giving the franchisee 10 calendar days' written notice.
Fitstop also retains the right to increase the required insurance limits or add new types of coverage as dictated by federal, state, and local laws or other circumstances. This ensures that the Fitstop franchise remains adequately protected against potential liabilities, but the financial responsibility for maintaining this coverage rests solely with the franchisee.