Does the Alloy franchise agreement specify that the minimum coverage amounts for insurance can be specified for all franchisees from time to time in writing?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
u must submit a Certificate of Insurance to us each year. 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 i
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the insurance policy or policies must be written in accordance with the standards and specifications, including minimum coverage amounts, set forth in writing by Alloy from time to time. However, these coverages and policy limits may be specified differently for all franchisees from time to time in writing. At a minimum, the insurance must include specific coverages, unless different coverages and policy limits are specified for all franchisees in writing. These coverages include special causes of loss coverage, business interruption insurance covering a minimum of 12 months loss of income, comprehensive general liability insurance in the amount of $1,000,000 per occurrence and $2,000,000 aggregate, and personal and advertising injury insurance with minimum limits of $2,000,000 per occurrence.
This means that Alloy retains the right to modify the minimum insurance coverage requirements for all franchisees, but any changes must be communicated in writing. This flexibility allows Alloy to adapt to changing industry standards, liability concerns, and experiences within the Alloy system.
For a prospective franchisee, this implies that the initial insurance requirements outlined in the franchise agreement are subject to change. It is important to maintain open communication with Alloy to stay informed about any modifications to the required minimum insurance limits and coverage. Failure to maintain the required insurance coverage could result in Alloy procuring insurance on the franchisee's behalf and charging the franchisee for the costs, along with a reasonable fee.