Is an Alloy franchisee permitted to have a deductible clause in their insurance policy?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
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
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees are permitted to have a deductible clause in their insurance policies. Specifically, Alloy requires franchisees to purchase and maintain insurance that covers both the franchisee and Alloy, its affiliates, and any other designated persons.
The insurance policy must adhere to Alloy's standards and specifications, including minimum coverage amounts. One of the required coverages is "special" causes of loss coverage on the facility, improvements, and all property used in the operation. Alloy specifies that this coverage should be for the full repair and replacement value. However, the FDD states that "an appropriate deductible clause is permitted."
This means that while Alloy mandates certain insurance coverages and amounts, franchisees have the flexibility to include a deductible in their policies. The term "appropriate" suggests that Alloy may have some discretion or guidelines regarding the acceptable deductible amount, but the document does not specify these. It is common practice in franchising to allow deductibles as a way for franchisees to manage insurance costs, while still maintaining adequate coverage as mandated by the franchisor.