What insurance coverage is required for Aw franchisees regarding worker's compensation and unemployment?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
including fire and extended coverage, vandalism, and malicious mischief insurance for 100% of the replacement value of the Papa Ray's Pizza Restaurant and its contents; (3) workers' compensation insurance and employer's liability insurance as required by applicable law; and (4) business interruption insurance for a minimum of twelve (12) months. We may periodically increase or decrease the amounts of coverage required under these insurance policies and require different or additional kinds of insurance at any time, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are required to obtain worker's compensation and employer's liability insurance as mandated by applicable law. This coverage is essential to protect both the franchisee and their employees in the event of workplace injuries or illnesses. The specific amounts and terms of coverage will be dictated by the legal requirements of the jurisdiction in which the Papa Ray's Pizza Restaurant is located.
In addition to worker's compensation, Aw franchisees must also carry other insurance policies, including comprehensive public liability, product liability, and motor vehicle liability insurance with minimum coverage of $1,000,000 per occurrence and $2,000,000 in the aggregate. They also need general casualty insurance, fire and extended coverage, vandalism, malicious mischief insurance for 100% of the replacement value of the restaurant and its contents, and business interruption insurance for a minimum of twelve months. Aw retains the right to modify these insurance requirements periodically to reflect changes in risks, laws, or liability standards.
It is the franchisee's responsibility to provide Aw with copies of all insurance policies and evidence of premium payments before opening the Papa Ray's Pizza Restaurant and before the expiration of each policy term. Failure to maintain the required insurance coverage may allow Aw to obtain the necessary coverage on the franchisee's behalf, with the franchisee responsible for all associated costs and premiums. The franchisee's insurance obligations are not reduced by any separate insurance that Aw may maintain.
While the FDD specifies the requirement for worker's compensation and employer's liability insurance, it does not explicitly detail requirements for unemployment insurance. A prospective franchisee should clarify with Aw the specific requirements for unemployment insurance, as these can vary significantly based on state and local laws. Understanding these obligations is crucial for managing employment-related costs and ensuring compliance with all applicable regulations.