Does the Gokhale Method franchisor have an obligation to procure insurance if the franchisee fails to do so?

Based on the 2024 Franchise Disclosure Document, the Gokhale Method franchise agreement outlines the franchisee's responsibilities regarding insurance but does not explicitly state that the franchisor is obligated to procure insurance if the franchisee fails to do so. According to section 13.1, franchisees must secure the required insurance coverage before commencing any business activities. This indicates that maintaining adequate insurance is solely the franchisee's responsibility.

Typically, franchise agreements require franchisees to maintain specific insurance coverage to protect both the franchisee and the franchisor from potential liabilities. The absence of a clause obligating the franchisor to obtain insurance on behalf of a non-compliant franchisee suggests that Gokhale Method intends to avoid assuming this responsibility. This arrangement places the onus entirely on the franchisee to ensure continuous and adequate insurance coverage.

Prospective Gokhale Method franchisees should carefully review the insurance requirements outlined in the franchise agreement and related exhibits. It is crucial to understand the types and amounts of coverage required, as well as the potential consequences of failing to maintain adequate insurance. Franchisees should also consult with an insurance professional to ensure they obtain appropriate coverage that meets the franchisor's requirements and protects their business interests. Since the FDD does not explicitly address the franchisor's obligation, it would be prudent for potential franchisees to seek clarification from Gokhale Method regarding the specific actions or penalties that may arise from a failure to maintain the required insurance coverage.