Under what circumstances will Punch King Fitness charge a franchisee for insurance?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
ure_0.jpeg)
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| exceed the amount equal to $100 per month. | |||
| Late Fees | $50 | Upon demand | A late fee must be paid on any payment to us that is more than 5 days late. |
| Interest | 10% per annum | Upon demand | In addition to the Late Fee, interest is assessed on any payment to us that is more than 30 days late. The interest accrues from the date the payment was due. |
| Insurance3 | Amount of premium paid by Punch King Fitness, Inc. plus 20% | Upon demand | If you do not purchase insurance coverage as required, you must reimburse us this amount to secure insurance coverage. |
| Delinquent Report Submission | $10 per day | Upon demand | If you fail to submit a report to us by more than 5 days late from when it was due, you must pay us this amount. |
| Additional Training and Conventions4 | $500 per day plus travel expenses for additional onsite support; $500 per attendee of additional training, national conventions, and for new or replacement managers to attend the initial training | Upon your registration for the training or convention | You must pay the current training fee for training and support beyond the initial training and National Co |
Source: Item 6 — OTHER FEES (FDD pages 10–16)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, if a franchisee fails to purchase the required insurance coverage, Punch King Fitness may secure the insurance coverage themselves. In this case, the franchisee is required to reimburse Punch King Fitness for the amount of the premium paid, plus an additional 20%. This reimbursement is due upon demand.
It is standard practice in franchising for franchisors to mandate certain insurance coverage levels to protect the brand and the network from liability. Franchisees are typically responsible for securing and maintaining their own insurance policies. However, this clause in the Punch King Fitness agreement allows the company to ensure coverage is in place, even if the franchisee defaults on their obligation.
Prospective franchisees should consider this potential cost and ensure they understand the insurance requirements outlined in the Franchise Agreement. Failing to maintain adequate insurance can result in Punch King Fitness stepping in to secure coverage and billing the franchisee for the premium plus a 20% surcharge, which could create an unexpected financial burden.