Is an Anago subfranchisor responsible for payment of all deductibles should an insurance claim arise?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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, the subfranchisor is responsible for paying all insurance deductibles should a claim arise. Specifically, the FDD states that the subfranchisor is required to obtain insurance coverage through the Anago National Insurance program for the entire term of the agreement.
This means that if an incident occurs that leads to an insurance claim, the Anago subfranchisor will have to pay the deductible amount out-of-pocket before the insurance coverage kicks in. The subfranchisor is responsible for maintaining the required insurance coverage, and failure to do so allows Anago to procure insurance coverage for the subfranchisor, with the subfranchisor then required to pay Anago for the premiums and expenses incurred.
This requirement is typical in franchising, as it ensures that franchisees bear some financial responsibility for managing risk and preventing losses. The Anago FDD also specifies minimum coverage amounts, including $1,000,000 combined single limit for commercial general casualty and general liability insurance, and an umbrella policy of $2,000,000. Additionally, the subfranchisor must maintain workers' compensation insurance of at least $500,000 per employee and an "Errors and Omissions" policy with $1,000,000 coverage.
Prospective Anago subfranchisors should carefully consider the potential costs of insurance deductibles when evaluating the financial feasibility of the franchise. They should also ensure they understand the specific insurance requirements and maintain adequate coverage to protect their business and assets.