What are the minimum standards that insurance companies must meet to provide coverage to Auntie Annes franchisees?
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 Anne's 2024 Franchise Disclosure Document, franchisees are required to purchase and maintain specific types of insurance coverage from insurance companies that meet Auntie Anne's minimum standards. While the FDD specifies that the details of the required insurance coverage are found in the Franchise Agreement and the Manuals, it does not explicitly state what these minimum standards are for the insurance companies themselves.
However, Auntie Anne's does specify that franchisees must also maintain minimum amounts of insurance coverage and name Auntie Anne's (and others they designate) as additional insureds on all policies. Franchisees must provide evidence of their insurance coverage before beginning operations, upon annual renewal, and within 10 days of Auntie Anne's demand for proof of coverage.
Auntie Anne's also reserves the right to obtain a master insurance policy on behalf of the entire franchise system for certain types of coverage. If this occurs, franchisees may be required to pay their proportionate share of the coverage under the master policy to Auntie Anne's or their Approved Supplier.
Prospective franchisees should carefully review the Franchise Agreement and Manuals to understand the specific types and amounts of insurance coverage required, as well as the minimum standards that insurance companies must meet. It would be prudent to discuss these requirements with an insurance broker to ensure compliance and to understand the potential costs associated with obtaining the necessary coverage.