If Fly Fitness procures insurance on behalf of the franchisee, what fees are charged?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
If, for any reason, Franchisee should fail to procure or maintain the insurance required by this Agreement as revised from time to time for all franchisees by the Manual or otherwise in writing, Franchisor shall have the right and authority (without, however, any obligation) to immediately procure such insurance and to charge
Franchisee for the cost thereof together with a ten percent (10%) administrative fee for Franchisor's expenses in so acting, including all attorneys' fees. Franchisee shall pay Franchisor immediately upon notice by Franchisor to Franchisee that Franchisor has undertaken such action and the cost thereof.
Source: Item 22 — CONTRACTS (FDD pages 44–45)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, if a franchisee fails to maintain the required insurance, Fly Fitness has the right to procure the insurance themselves. If Fly Fitness does so, they will charge the franchisee for the cost of the insurance, along with a 10% administrative fee to cover their expenses, including attorney's fees.
This means that franchisees must ensure they maintain the required insurance coverage to avoid these additional costs. The 10% administrative fee could add a significant expense on top of the insurance premium.
Franchisees are required to pay Fly Fitness immediately upon notice that Fly Fitness has obtained the insurance and the associated costs. This could create a financial burden if a franchisee is unprepared for the additional expense.