Is an Anago Subfranchisor required to ensure that Unit Franchisees obtain the required insurance coverage?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Subfranchisor must require all Unit Franchisees to obtain coverage of the types and amounts as required by Franchisor, protecting Franchisor and Subfranchisor against any and all claims, damages or harm caused by the Unit Franchise operations. Franchisor will at its option obtain insurance for any and all Unit Franchisees that do not produce proof of coverage and charge Subfranchisor for that coverage. Subfranchisor agrees that it shall be solely responsible to monitor the Unit Franchisee compliance with the insurance requirements and will forward any and all proof of coverage to Franchisor at its request.
IMPORTANT
Unit Franchisees must provide proof of every required coverage. If you are not insured through Subfranchisor's policy or policies, you are required to notify Subfranchisor of any changes or lapse in coverage of your policy or policies. Failure to do so is a material default to your Franchise Agreement. Certificates of Insurance and Declarations Pages typically will not list all of the coverage's required by Subfranchisor. Upon request, Franchisees may need to provide copies of the entire insurance policy, including all endorsements, in order to provide evidence of that they meet all of the above requirements.
Additional Insured Language
All policies shall list "Anago Franchising, Inc., Anago Cleaning Systems, Inc., and (Corp Name) as Additional Insured"
We may periodically adjust the amounts of coverage required under the insurance policies and require different or additional kinds of insurance at any time, including excess liability
insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances, if the changes are required throughout the System including any Company Units. (See Exhibit 10) We must be named as an additional insured to any insurance policy you obtain for Your Business.
We, or Our insurer, have the right to participate in discussions with Your insurance company or any claimant (with Your insurance company) regarding any claim. You agree to adopt Our reasonable recommendations to Your insurance carrier regarding the settlement of any claims.
- (a) Subfranchisor will procure and maintain in full force and effect during the Term, at Subfranchisor's sole expense, an insurance policy or policies, as required by Franchisor, including coverage protecting Subfranchisor and Franchisor, and their officers, directors, partners and employees, against any loss, liability, personal injury, death, or property damage or expense arising from Subfranchisor's obligations under this Agreement. The Subfranchisor is required to obtain insurance coverage through the Anago National Insurance program during the entire Term. All liability policies will name Franchisor as the additional insured and will provide that Franchisor will receive notice of Subfranchisor's default in payment of any premium and 30 days' prior written notice of termination, cancellation, expiration or alteration to provide less coverage. The insurance afforded by any liability policy will not be limited in any way by reason of any insurance maintained by Franchisor. Subfranchisor is responsible for payment of all deductibles, should a claim arise.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, Subfranchisors must ensure that all Unit Franchisees obtain the required insurance coverage. Subfranchisors are required to make sure Unit Franchisees have the types and amounts of coverage that Anago requires, protecting both Anago and the Subfranchisor from claims, damages, or harm resulting from the Unit Franchise operations. Anago can obtain insurance for Unit Franchisees who do not provide proof of coverage, and then charge the Subfranchisor for the cost of that coverage. The Subfranchisor is responsible for monitoring Unit Franchisee compliance with insurance requirements and must forward proof of coverage to Anago upon request.
Unit Franchisees must provide proof of every required coverage. If they are not insured through the Subfranchisor's policy, they must notify the Subfranchisor of any changes or lapses in their coverage. Failure to do so constitutes a material default of their Franchise Agreement. Certificates of Insurance and Declarations Pages may not list all required coverages, and Franchisees may need to provide copies of their entire insurance policy, including all endorsements, to prove they meet all requirements. All policies must list "Anago Franchising, Inc., Anago Cleaning Systems, Inc., and (Corp Name) as Additional Insured".
Anago may periodically adjust the required coverage amounts and types, including excess liability insurance, to reflect factors like inflation, new risks, changes in law, or higher damage awards, provided these changes apply throughout the Anago system, including company-owned units. Anago must be named as an additional insured on any insurance policy obtained for the Unit Franchise business. Anago, or its insurer, has the right to participate in discussions regarding any claim with the Unit Franchisee's insurance company or any claimant. Unit Franchisees must adopt Anago's reasonable recommendations for settling claims.
The Subfranchisor is required to obtain insurance coverage through the Anago National Insurance program during the entire term. The insurance policies must protect the Subfranchisor and Anago, including their officers, directors, partners, and employees, against any loss, liability, personal injury, death, property damage, or expense arising from the Subfranchisor's obligations under the agreement. All liability policies will name Anago as an additional insured and provide that Anago will receive notice of any premium payment default and 30 days' prior written notice of termination, cancellation, expiration, or alteration of coverage. The Subfranchisor is responsible for paying all deductibles should a claim arise.