Must the insurance company providing coverage for Aunt Millies Bakeries be acceptable to the Secured Party?
Aunt_Millies_Bakeries Franchise · 2025 FDDAnswer from 2025 FDD Document
contractual liability coverage) with $2,000,000 combined single limits;
- (ii) Automobile liability insurance with minimum limits of $2,000,000 combined single limits, on all vehicle(s) used in Distributor's business; and
- (iii) Collision and Comprehensive damage coverage with a deductible no greater than $500.00 on all vehicle(s) used in Distributor's business.
In the event a substitute vehicle is used by Distributor coverage will automatically apply to the substitute vehicle. In addition, the Distributor must carry policies or riders providing cargo insurance in an amount of not less than $2,000, and Inland Marine coverage of not less than $5,000. In the event equipment to be insured exceeds the value of $5,000.00, additional Inland Marine coverage must be purchased. The insurance contemplated shall be in a form acceptable to Secured Party, shall name Secured Party as an additi
Source: Item 23 — RECEIPT (FDD pages 44–196)
What This Means (2025 FDD)
According to Aunt Millies Bakeries' 2025 Franchise Disclosure Document, the insurance coverage obtained by the distributor must be in a form acceptable to the Secured Party. This requirement applies to the insurance policies or riders that the distributor must carry, including cargo insurance of not less than $2,000 and Inland Marine coverage of not less than $5,000. If the equipment to be insured exceeds $5,000, additional Inland Marine coverage must be purchased.
The Secured Party must also be named as an additional insured and as a loss payee on any collision or comprehensive damage policy covering physical assets on which the Secured Party has a lien. Furthermore, the insurance provider must give the Secured Party 30 days' advance written notice of any material changes or cancellation of the coverage. A certificate confirming that the required coverages are in effect and primary over any other applicable insurance must be delivered to the Secured Party upon request.
This provision ensures that Aunt Millies Bakeries, as the Secured Party, has adequate protection and control over the insurance coverage related to the distributor's operations and assets. It allows Aunt Millies Bakeries to mitigate potential financial risks associated with damages, losses, or liabilities incurred by the distributor. A prospective franchisee should confirm who the secured party is and what their specific requirements are for insurance providers to ensure compliance.