What minimum coverages must the Alloy franchisee's insurance include?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
obtain your insurance through the designated carrier(s).
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. You 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 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 applicable law, but not less than $500,000, (ix)
other insurance required by the state or locality in which your Franchised Business is located and operated or as may be required by the lease or mortgage for the premises. If you are a multi-unit developer, we recommend that you purchase; (ix) an umbrella liability insurance; (x) automobile liability insurance; (xi) "Per Location" aggregate limits when multiple facility locations are insured under one comprehensive general liability and umbrella liability policy; (xii) Alloy Personal Training, LLC and its affiliates are named as additional insureds on all liability policies required by this subparagraph; (xiii) severability of interests and/or separation of insureds provisions must be included in the liability policies and an endorsement is required providing that the franchisee's insurance is primary with respect to any insurance policy carried by Alloy Personal Training, LLC and its affiliates and any insurance maintained by Alloy Personal Training, LLC or its affiliates is excess and non-contributing; (xiv) a waiver of subrogation endorsement must be obtained; and (xv) any other such insurance coverages or amounts as we may designate or as required by law or other agreement related to the Facility. In addition, related to any construction, renovation or remodeling of the Franchised Business, you must maintain builder's risks insurance and performance and completion bonds in forms and amounts, and written by a carrier or carriers, satisfactory to us.
Each insurance policy must: (a) name us and our affiliates as additional named insureds under your liability policies and contain a waiver of all subrogation rights against us; (b) provide for 30 days' prior written notice to us of cancellation or statutory requirement; (c) provide that coverage applies separately to each insured against whom a claim is brought; (d) contain no provision which limits coverage in the event of a claim by a party who is indemnified under the Franchise Agreement; (e) be primary and non-contributory; and (f) extend to and provide indemnity for obligations assumed by you under the Franchise Agreement.
We have the right to require that you obtain from your insurance company a report of claims made and reserves set against your insurance. We reserve the right to change our insurance requirements during the term of your Franchise Agreement, including the types of coverage and the amounts of coverage, and you must comply with those changes.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees must acquire and maintain insurance policies that cover both the franchisee, Alloy, its affiliates, and any other persons Alloy designates. The specific insurance requirements must align with Alloy's written standards, including minimum coverage amounts, which Alloy may modify over time.
At a minimum, the required insurance coverage includes: (i) "special" causes of loss coverage forms on the Facility, facility improvements and all property used in the operation of the Facility, for full repair and replacement value; (ii) business interruption insurance covering a minimum of 12 months loss of income, including coverage for Royalty Fees; (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 applicable law, but not less than $500,000; and (ix) other insurance required by the state or locality in which your Franchised Business is located and operated or as may be required by the lease or mortgage for the premises.
For multi-unit developers, Alloy recommends additional insurance including umbrella liability insurance, automobile liability insurance, and "Per Location" aggregate limits when multiple facility locations are insured under one comprehensive general liability and umbrella liability policy. Alloy and its affiliates must be named as additional insureds on all liability policies, and the policies must include severability of interests and/or separation of insureds provisions. The franchisee's insurance must be primary with respect to any insurance policy carried by Alloy, and a waiver of subrogation endorsement must be obtained.
These insurance coverages, with a few exceptions, must commence as of the date the Franchise Agreement is signed. The exceptions are coverages referenced in (i), (ii) and (v) of this subparagraph which must commence as of the date construction begins at the Facility. Franchisees must provide Alloy with a certificate evidencing the insurance coverage at commencement and annually, or upon request. Alloy retains the right to modify the required minimum limits and require additional insurance coverages by providing written notice to the franchisee.