What happens if a Spray Net franchisee fails to maintain the required insurance?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Failure to Procure and Maintain Insurance. If Franchisee fails for any reason to procure and maintain the required insurance coverage, Franchisor has the right and authority (without having any obligation to do so) to immediately procure such insurance coverage, in which case Franchisee must: (i) reimburse Franchisor for the costs incurred to obtain the required insurance (including any premium amounts paid); and (ii) pay Franchisor its then-
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, if a franchisee fails to procure and maintain the required insurance coverage, Spray Net has the right, but not the obligation, to procure such insurance coverage immediately.
In such a case, the franchisee is obligated to reimburse Spray Net for the costs incurred to obtain the required insurance, including any premium amounts paid. Additionally, the franchisee must pay Spray Net its then-current administrative fee, which Spray Net may reasonably charge as consideration for securing the required insurance on the franchisee's behalf.
This clause ensures that Spray Net can protect its brand and business interests by maintaining the necessary insurance coverage, even if the franchisee fails to do so. However, it also places the financial burden on the franchisee to cover the costs and an administrative fee, which could impact their profitability. Franchisees should ensure they understand the insurance requirements and maintain coverage to avoid these additional expenses and potential disruptions to their business.