Who is responsible for the cost of insurance policies required for an Apricot Lane franchise?
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, the franchisee is responsible for procuring and maintaining the required insurance policies at their own expense. Specifically, Section 16A states that the franchisee must maintain insurance policies protecting both the franchisee and Apricot Lane, including its officers, directors, partners, and employees, against loss or liability. These policies must cover types and amounts of coverage that Apricot Lane reasonably requires for its and the franchisee's protection.
The required insurance includes, but is 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. Apricot Lane must be named as an additional insured in these policies. The specific insurance specifications are provided in writing in the Confidential Operations Manual or otherwise and may be modified by Apricot Lane as deemed necessary.
The insurance policies must be written by an insurance company licensed in the state where the franchisee operates and have at least an "A" Rating Classification as indicated in Best's Key Rating Guide. Within sixty days of signing the Franchise Agreement, but no later than acquiring an interest in the real property, the franchisee must furnish Apricot Lane with a Certificate of Insurance for approval. This certificate must state that the policies will not be canceled or altered without at least thirty days' prior written notice to Apricot Lane and must reflect proof of premium payment. The franchisee's obligation to maintain insurance does not relieve them of liability under the indemnity provision in the Agreement.