When must an Auntie Annes franchisee provide evidence of insurance coverage?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
We require you to purchase and maintain specific types of insurance coverage as described in more detail in the Franchise Agreement and the Manuals from insurance companies that meet our minimum standards. We also specify the minimum amounts of insurance coverage you must maintain. All insurance policies must name us and others we designate as additional insureds. You must provide us with evidence of your insurance coverage before you begin operations at your Shop, upon annual renewal of your insurance, and otherwise within 10 days of our demand for proof. We reserve the right to obtain a master insurance policy on behalf of the System for certain types of coverage and require you to pay all or a portion of your proportionate share of coverage under the master policy to us or our Approved Supplier.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 54–59)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, franchisees must provide evidence of insurance coverage at three specific times. First, a franchisee must provide evidence of insurance before beginning operations at their shop. This ensures that the business is protected from day one. Second, franchisees must provide evidence upon the annual renewal of their insurance policies, demonstrating continuous coverage. Finally, Auntie Annes can demand proof of insurance coverage at any other time, and the franchisee must provide this evidence within 10 days of the demand.
The requirement to maintain specific types and amounts of insurance coverage is common in franchising. This protects not only the franchisee but also Auntie Annes from potential liabilities. Naming Auntie Annes and other designated parties as additional insureds on the policies further safeguards the brand.
The franchisor also retains the right to obtain a master insurance policy on behalf of the entire system for certain types of coverage. If Auntie Annes exercises this right, franchisees will be required to pay their proportionate share of the coverage costs. This could potentially offer franchisees cost savings or more comprehensive coverage than they might obtain individually.