Must the insurance company providing coverage to an Apricot Lane franchisee be licensed in the state where the franchisee operates?
Apricot_Lane Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Policy Requirements
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- FRANCHISEE shall procure at its expense and maintain in full force and effect during the term of this Agreement, an insurance policy or policies protecting FRANCHISEE and FRANCHISOR and its officers, directors, partners and employees, against loss or liability in such types and amounts of coverage as FRANCHISOR may reasonably require for its own and FRANCHISEE's protection, including but not limited to commercial general liability and products liability coverage, all risk coverage on the Franchised Business, business interruption insurance, automobile liability insurance and workers' compensation insurance. FRANCHISOR shall be named an additional insured in such policy or policies. Required insurance specifications shall be provided to FRANCHISEE in writing in the Confidential Operations Manual or otherwise and may be modified from time to time, as FRANCHISOR deems necessary or appropriate in its reasonable discretion.
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- Such policy or policies shall be written by an insurance company licensed in the state in which FRANCHISEE operates and having at least an "A" Rating Classification as indicated in Best's Key Rating Guide in accordance with standards and specifications set forth in the Confidential Operations Manual or otherwise in writing.
B. Certificate of Insurance
The insurance afforded by the policy or policies respecting liability shall not be limited in any way by reason of any insurance that may be maintained by FRANCHISOR. Within sixty (60) days of the signing of this Agreement, but in no event later than the date on which FRANCHISEE acquires an interest in the real property on which it will develop and operate the Franchised Business, a Certificate of Insurance showing compliance with the foregoing requirements shall be furnished by FRANCHISEE to FRANCHISOR for approval. Such certificate shall state that said policy or policies will not be canceled or altered without at least thirty (30) days prior written notice to FRANCHISOR and shall reflect proof of payment of premiums. Maintenance of such insurance and the performance by FRANCHISEE of the obligations under this paragraph shall not relieve FRANCHISEE of liability under the indemnity provision set forth in this Agreement. Minimum limits as required above may be modified from time to time, as conditions require, by written notice to FRANCHISEE or by modifications to the Confidential Operations Manual.
Source: Item 23 — RECEIPTS (FDD pages 51–222)
What This Means (2025 FDD)
According to Apricot Lane's 2025 Franchise Disclosure Document, franchisees are required to secure insurance policies from a company that is licensed in the state where they operate their franchise. This requirement ensures that the insurance provider meets the legal and regulatory standards of the franchisee's specific location, offering a level of protection and recourse in case of disputes or claims.
In addition to being licensed in the relevant state, the insurance company must also have at least an "A" Rating Classification as indicated in Best's Key Rating Guide. This rating signifies the insurance company's financial strength and ability to meet its obligations, providing further assurance to both the franchisee and Apricot Lane that the coverage is reliable.
The insurance specifications, including the types and amounts of coverage required, are detailed in the Confidential Operations Manual or provided separately in writing and may be updated periodically by Apricot Lane. Franchisees must furnish a Certificate of Insurance to Apricot Lane within sixty days of signing the Franchise Agreement, and no later than acquiring interest in the property, demonstrating compliance with these insurance requirements. This certificate must also confirm that the policy will not be canceled or altered without at least thirty days' prior written notice to Apricot Lane and must include proof of premium payment.