What is the minimum coverage period for business interruption insurance for a Baya Bar franchise?
Baya_Bar Franchise · 2024 FDDAnswer from 2024 FDD Document
ompany. All insurance must be on an "occurrence" basis. Currently you must maintain the following insurance: (1) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Franchised Business, for full repair and replacement value (subject to a reasonable deductible); (2) Business interruption insurance covering at least 12 months of income; (3) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit; (4) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000; (5) Workers Compensation coverage as required by state law; and (6) any insurance required by the terms of your leas
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 20–24)
What This Means (2024 FDD)
According to Baya Bar's 2024 Franchise Disclosure Document, franchisees must maintain business interruption insurance covering at least 12 months of income. This insurance is part of a broader set of required coverages that Baya Bar franchisees must secure.
This requirement means that a Baya Bar franchisee needs to have an insurance policy that will cover their income for a minimum of one year if the business is interrupted due to unforeseen circumstances such as fire, vandalism, or other covered events. The purpose of this insurance is to help the franchisee maintain financial stability during a period when the business is not generating revenue.
In addition to business interruption insurance, Baya Bar also mandates other insurance coverages, including property insurance, commercial general liability insurance, business automobile liability insurance, and workers' compensation coverage. Franchisees must obtain these insurance policies when they sign the lease for the shop premises or 90 days after signing the Franchise Agreement, whichever occurs first. Furthermore, Baya Bar has the right to change the insurance requirements during the term of the Franchise Agreement, and franchisees must comply with these changes. Failing to obtain the required insurance allows Baya Bar to purchase insurance on the franchisee's behalf, with the franchisee responsible for reimbursing the costs plus a 10% administrative fee.