Does the Alloy franchise agreement specify that the insurance coverage on the facility, improvements, furniture, fixtures, equipment, and supplies must be for full repair and replacement value?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
ge as a result of any actions or omissions of you or your employees, including any that relate to any party making a finding of any joint employer status, you will fully indemnify us for any such loss.
C. Insurance. You must purchase and maintain in full force and effect, at your expense and from a company we accept, insurance that insures both you and us, our affiliates and any other persons we designate by name. The insurance policy or policies must be written in accordance with the standards and specifications (including minimum coverage amounts) set forth in writing by us from time to time, and, at a minimum, must include the following (except as different coverages and policy limits may be specified for all franchisees from time to time in writing): (i) "special" causes of loss coverage forms (sometimes called "All Risk Coverage" or "All Peril Coverage") on the Facility, facility improvements and all furniture, fixtures, equipment, supplies and other property used in the operation of the Facility, for full repair and replacement value, except that an appropriate deductible clause is permitted; (ii) business interruption insurance covering a minimum of 12 months loss of income, including coverage for our Royalty Fees (for example, in the event of a fire or destruction of the premises, the insurance must cover our average royalty payments (based on the previous 12-month timeframe, or if a shorter timeframe, the total operating timeframe for the facility) during the rebuilding process); (iii) comprehensive general liability insurance in the amount of $1,000,000 per occurrence and $2,000,000 aggregate; (iv) personal and advertising injury insurance with minimum limits of $2,000,000 per occurrence; (v) fire damage coverage in an amount sufficient to cover the replacement costs of the Facility equipment, improvements and betterments; (vi) medical expense coverage in the amount of $10,000 to $25,000; (vii) workers' compensation insurance covering all of your employees, as required by law; (viii) employers liability insurance with contingent liability in amounts required by appli
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees are required to maintain insurance coverage that includes "special" causes of loss coverage on the facility, facility improvements, and all furniture, fixtures, equipment, supplies, and other property used in the operation of the facility. This coverage must be for the full repair and replacement value, although an appropriate deductible clause is permitted.
In addition to the coverage for repair and replacement value, Alloy franchisees must also secure business interruption insurance covering a minimum of 12 months of lost income, including coverage for royalty fees. This ensures that even in the event of a disaster like a fire, the franchisee can continue to meet their royalty obligations to Alloy during the rebuilding process. The insurance must cover Alloy's average royalty payments based on the previous 12-month timeframe, or if a shorter timeframe, the total operating timeframe for the facility.
Furthermore, Alloy mandates several other insurance coverages, including comprehensive general liability insurance ($1,000,000 per occurrence and $2,000,000 aggregate), personal and advertising injury insurance ($2,000,000 per occurrence), fire damage coverage sufficient to cover replacement costs, medical expense coverage ($10,000 to $25,000), workers' compensation insurance, and employers liability insurance (not less than $500,000). Franchisees must also carry any other insurance required by state or local laws or by the lease or mortgage for the premises. These insurance requirements are designed to protect both the franchisee and Alloy from a variety of potential liabilities and losses.