Does Alloy specify the standards and specifications for the insurance policies that Alloy franchisees must maintain?
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, franchisees must purchase and maintain insurance policies from a company that Alloy accepts. These policies must adhere to the standards and specifications, including minimum coverage amounts, that Alloy sets forth in writing.
The required insurance must include "special" causes of loss coverage on the facility, improvements, furniture, fixtures, equipment, and supplies, set at full repair and replacement value, though an appropriate deductible is permitted. Additionally, franchisees need business interruption insurance covering a minimum of 12 months of lost income, which includes coverage for royalty fees. For example, if the premises are destroyed, the insurance must cover Alloy's average royalty payments based on the previous 12-month timeframe or the total operating timeframe if shorter.
Comprehensive general liability insurance is also required. Alloy retains the right to modify the required minimum limits and require additional insurance coverages by providing written notice to the franchisee. This allows Alloy to adjust insurance requirements based on changing circumstances, industry standards, experiences within the Alloy system, liability standards, and higher damage awards. If a franchisee fails to maintain the required insurance coverage, Alloy has the right, but not the obligation, to procure the insurance and charge the costs, along with a reasonable fee, to the franchisee, payable immediately upon written notice.