Must the insurance policies for my Annex Brands franchise be issued by carriers with a specific rating?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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To ensure adequate insurance coverage, Subsection 9.I of the franchise agreement requires you to obtain and maintain in force, at your sole expense, under policies of insurance issued by carriers with no less than a Best's rating of A, the following:
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- Comprehensive general, public, and product liability insurance, against claims for bodily and personal injury, death, and property damage caused by or occurring in conjunction with the operation of your retail center or otherwise in conjunction with your conduct of business under the franchise agreement, under 1 or more policies of insurance containing a minimum of $2,000,000 per occurrence and $4,000,000 aggregate liability coverage.
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- Notary professional liability insurance of at least $500,000 or the maximum permitted by the state if less than $500,000.
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- Property insurance against any claims at your retail center included within the classification "Causes of Loss – Special Form," including vandalism, malicious mischief and theft. The coverage must be in an amount not less than 100% of the actual replacement cost of your retail center, and also must include property of others in your care, custody or control with a minimum limit of $400,000, and employee dishonesty coverage with a minimum limit of $25,000.
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- Business interruption coverage on an "actual loss sustained" basis for a period of not less than 24 months or the maximum permitted by the state if less than 24 months.
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- Motor vehicle liability insurance policies covering all vehicles (owned, nonowned, leased, hired, rented or borrowed) operated by or on behalf of the busine
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 39–43)
What This Means (2025 FDD)
According to the 2025 FDD, Annex Brands requires franchisees to secure insurance policies from carriers with a minimum Best's rating of A. This requirement is detailed in Subsection 9.I of the franchise agreement, which emphasizes the need for adequate insurance coverage.
Specifically, Annex Brands mandates several types of insurance, including comprehensive general, public, and product liability insurance with a minimum of $2,000,000 per occurrence and $4,000,000 aggregate liability coverage. Additionally, franchisees must maintain notary professional liability insurance of at least $500,000 (or the maximum permitted by state law if less), property insurance covering 100% of the retail center's replacement cost (including coverage for property of others with a minimum limit of $400,000 and employee dishonesty coverage with a minimum limit of $25,000), and business interruption coverage for at least 24 months (or the maximum permitted by state law if less). Motor vehicle liability insurance with a minimum amount of $2,000,000 is also required for all vehicles operated for the business.
For flex centers offering expanded services like household moving, Annex Brands requires additional insurance coverage, including "Bailee's" insurance with specific limits for personal property in the franchisee's care, custody, and control, both at the retail center and other locations, as well as during transport. Furthermore, these flex centers must carry employment practices insurance of at least $500,000 per incident and $1,000,000 in the aggregate, along with umbrella insurance with a minimum limit of $2,000,000. Standard, flex, and express retail centers must ensure their insurance coverage aligns with the correct business classifications, such as retail centers specializing in business support, mailbox rental, and shipping services.
The requirement to use insurance carriers with a Best's rating of A is a risk mitigation measure by Annex Brands, ensuring that franchisees have coverage from financially stable and reputable insurers. This protects both the franchisee and the franchisor in the event of a claim. Franchisees should factor in the cost of these insurance policies from approved carriers when evaluating the overall investment and operating expenses of an Annex Brands franchise.