Can the franchisor increase the required amounts of insurance coverage for a Hyper Kidz franchise?
Hyper_Kidz Franchise · 2024 FDDAnswer from 2024 FDD Document
mployer liability insurance in the amounts required by the state in which the Hyper Kidz Business is located; and
- (j) any insurance required by the terms of your lease or that we may require in the future.
- 11.8.2 None of your insurance policies shall have a deductible of greater than One Thousand Dollars ($1,000). You shall also maintain such additional insurance as is necessary to comply with all legal requirements concerning insurance. We may periodically increase the amounts of coverage required under such insurance policies and require different or additional kinds of insurance at any time, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances. We have the right
to require that you obtain from your insurance company a report of claims made and reserves set against your insurance.
11.8.3 The insurance policies required herein shall:
- (a) name us and our Affiliates as additional named insureds and contain a waiver of all subrogation rights against us, our Affiliates, and our respective successors and assigns;
- (b) provide for thirty (30) days' prior written notice to us of any material modification, cancellation, or expiration of such policy;
- (c) provide that the coverage applies separately to each insured against whom a claim is brought as though a separate policy had been issued to each insured;
- (d) contain no provision which in any way limits or reduces coverage for you in the event of a claim by any one or more of the parties indemnified under this Agreement;
- (e) be primary to and without right of contribution from any other insurance purchased by the parties indemnified under this Agreement; and
- (f) extend to and provide indemnity for all obligations assumed by you hereunder and all other items for which you are required to indemnify us under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Hyper Kidz's 2024 Franchise Disclosure Document, Hyper Kidz has the right to change their insurance requirements, and franchisees must comply with these changes. Hyper Kidz may periodically increase the amounts of coverage required under insurance policies and require different or additional kinds of insurance at any time, including excess liability insurance. These changes can reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
As of the date of the Franchise Agreement, Hyper Kidz's current insurance requirements include public/general liability insurance of $1,000,000 per occurrence and $2,000,000 aggregate, umbrella liability insurance of $1,000,000, and property damage insurance of $400,000. Franchisees must also maintain business interruption insurance, money and securities insurance of $10,000 per occurrence inside and $1,000 per occurrence outside, and workers compensation and employer liability insurance in the amounts required by the state in which the Hyper Kidz Business is located.
Hyper Kidz also has the right to require that franchisees obtain from their insurance company a report of claims made and reserves set against their insurance. Franchisees are responsible for maintaining sufficient insurance coverage, and their obligations to maintain insurance coverage are not affected by any separate insurance maintained by Hyper Kidz. If a franchisee fails to maintain required insurance coverage, Hyper Kidz may obtain such insurance coverage on the franchisee's behalf and charge the franchisee for the costs and premiums incurred, plus a ten percent administrative fee. Failure to reimburse Hyper Kidz for insurance costs may result in termination of the Franchise Agreement.