Does the Kidokinetics Franchisor have an obligation to procure insurance if the franchisee fails to do so?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
- 14.3. Failure to Procure.
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 Franchise Operations Manual or otherwise in writing, Franchisor will have the right and authority (without, however, any obligation) to immediately procure such insurance and to charge Franchisee for the cost of the insurance plus twenty percent (20%) of the premium for an administrative cost of obtaining the insurance.
Franchisee shall pay Franchisor immediately upon notice by Franchisor to Franchisee that Franchisor has undertaken such action and the cost.
Source: Item 22 — CONTRACTS (FDD page 59)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, while the franchisee is responsible for securing and maintaining the required insurance coverage, the franchisor has the right, but not the obligation, to procure insurance on behalf of the franchisee if the franchisee fails to do so.
If a Kidokinetics franchisee fails to maintain the required insurance, Kidokinetics has the right to obtain the necessary insurance coverage. The franchisee is then responsible for reimbursing Kidokinetics for the cost of the insurance, in addition to paying twenty percent (20%) of the premium to Kidokinetics as an administrative fee for obtaining the insurance. The franchisee must pay Kidokinetics immediately after receiving notice of this action and the associated costs.
This clause in the agreement protects Kidokinetics from potential liabilities arising from a franchisee's lack of insurance. While Kidokinetics is not obligated to secure insurance for a non-compliant franchisee, it retains the right to do so and pass the costs, plus an administrative fee, onto the franchisee. This ensures that Kidokinetics can maintain brand standards and mitigate risks associated with uninsured franchisees.