What is the Kidokinetics franchisee required to do to protect the franchisor from liability?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
or damages.
14. INSURANCE AND INDEMNIFICATION
- 14.1. Procurement. Franchisee shall procure, prior to the commencement of any operations under this Agreement, and maintain in full force and effect during the term of this Agreement at Franchisee's sole cost and expense and to Franchisor's sole satisfaction, insurance policies rated A or better with A.M. Best Company, protecting Franchisee and Franchisor, and naming Franchisor, its officers, directors, partners, owners, employees and affiliates as additional insureds, with at least the following coverage and limits (except as additional coverage and higher policy limits may reasonably be specified from time to time by Franchisor in the Franchise Operations Manual or otherwise in writing):
- 14.1.1. Liability. Franchise will be required to procure and maintain insurance in the amounts Franchisor prescribes. Presently, Franchisor's insurance requirements are as follows: (i) comprehensive general liability insurance in the amount of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, or in the event you lease commercial office space or storage space, such amount as required by your lease or state laws; (ii) umbrella excess liability coverage
in an amount equal to $1,000,000 combined single limit coverage; (iii) automobile insurance in the amount of at least a combined single limit for bodily and property damage of $100,000, or greater if required by state law; and, if you have employees, statutory worker's compensation insurance in the limits required by state law; (iv) hired-non owned automobile insurance; (v) crime insurance for employee dishonesty in the amount of $5,000 combined single limit; (vi) sexual abuse and molestation coverage; (vii) an accident policy; and (viii) workers compensation with $1,000,000 limits or such additional limits as required by state law.
- 14.2. Certificates. At least 30 days prior to the opening of the Kidokinetics Business and policy renewal date, Franchisee shall deliver to Franchisor Certificates of Insurance evidencing the existence and continuation of proper coverage
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, franchisees are required to maintain specific insurance policies to protect both themselves and the franchisor from liability. These policies must be rated A or better by A.M. Best Company and name Kidokinetics, its officers, directors, partners, owners, employees, and affiliates as additional insureds. The franchisee bears the sole cost and expense of these insurance policies.
The required insurance coverage includes comprehensive general liability insurance of at least $1,000,000 per occurrence and $2,000,000 in the aggregate. If the franchisee leases commercial or storage space, the amount must meet lease or state law requirements. Additionally, franchisees need umbrella excess liability coverage of $1,000,000 combined single limit, automobile insurance with at least a combined single limit of $100,000 for bodily and property damage (or more, if required by state law), statutory worker's compensation insurance within state-required limits if they have employees, hired/non-owned automobile insurance, crime insurance for employee dishonesty of $5,000 combined single limit, sexual abuse and molestation coverage, an accident policy, and workers compensation with $1,000,000 limits or such additional limits as required by state law.
Kidokinetics franchisees must provide Certificates of Insurance to the franchisor at least 30 days before opening their business and before the policy renewal date. These certificates serve as proof that the franchisee has the required coverage with the necessary limits. The franchisor may also specify additional coverage or higher policy limits in the Franchise Operations Manual or in writing, so franchisees need to stay updated on these requirements. Failing to maintain the required insurance coverage could expose the franchisee to significant financial and legal risks, as well as potential breaches of the franchise agreement.