What is the minimum coverage period for business interruption insurance that franchisees must maintain for their Aw Papa Ray's Pizza Restaurant?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
nership interest in an approved supplier.
Before you open your Papa Ray's Pizza Restaurant for business, you must obtain and maintain the insurance coverage that we require from time to time and meet other insurance-related
obligations described in the Franchise Agreement. Currently, you must maintain insurance as follows: (1) comprehensive public liability, product liability and motor vehicle liability (including hired and non-owned auto liability) insurance against claims for bodily and personal injury, death, property damage and injuries caused by or occurring in the operation of the Papa Ray's Pizza Restaurant or the conduct of business pursuant to the Franchise Agreement under one or more policies of insurance with minimum liability coverage of $1,000,000 per occurrence and $2,000,000 in the aggregate; (2) general casualty insurance including fire and extended coverage, vandalism, and malicious mischief insurance for the replacement value of the Papa Ray's Pizza Restaurant and its contents; (3) workers' compensation and employer's liability insurance as required by applicable law; and (4) business interruption insurance for a minimum of 12 months. The cost of this coverage will vary, depending on the insurance carrier's charges, terms of payment and your history. Each insurance policy must name us (and, if we request it, our officers, members, manager, and employees) as an additional insured and must provide us with 30 days advance written notice of any material modification,
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–21)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are required to maintain business interruption insurance for a minimum of 12 months. This insurance coverage is in addition to other required 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. Franchisees must also carry general casualty insurance and workers' compensation and employer's liability insurance as required by law.
The business interruption insurance is designed to protect the franchisee from financial losses in the event that the Papa Ray's Pizza Restaurant is temporarily unable to operate due to unforeseen circumstances such as fire, natural disaster, or other covered events. The 12-month minimum coverage period ensures that the franchisee has a financial safety net to cover ongoing expenses like rent, utilities, and payroll while the restaurant is being repaired or rebuilt. This requirement helps to mitigate the risk of permanent closure due to a temporary disruption.
Aw also requires that each insurance policy names Aw (and, if requested, their officers, members, manager, and employees) as an additional insured. Furthermore, Aw must receive 30 days advance written notice of any material modification, cancellation, or expiration of the policy. These stipulations allow Aw to monitor franchisees' compliance with the insurance requirements and to protect its own interests in the event of a claim. The cost of the required insurance coverage will vary depending on the insurance carrier's charges, terms of payment, and the franchisee's history.