Is it mandatory to obtain the insurance coverage that Beard Papas requires?
Beard_Papas Franchise · 2025 FDDAnswer from 2025 FDD Document
vendors and marketing channels.
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- Insurance You must obtain the insurance coverage that we require from time to time as presently disclosed in the Manuals and as we may modify. All insurance policies required under your Franchise Agreement and as set forth in the Franchise Agreement must be written by a responsible carrier, reasonably acceptable to us and all insurance (excluding workers' compensation) must name us, our officers, directors, shareholders, partners, agents, representatives and independent contractors as additional insureds. The insurance policies must include a provision that the insurance carrier must provide us with no less than 30 days' prior written notice in the event of a material alteration to, or cancellation of, any insurance policy. A certificate of insurance must be furnished by you to use at the earlier of 90 days after the Effective Date of the Franchise Agreement or prior to the commencement of our initial training program. Insurance coverage must be at least as comprehensive as the minimum requirements set forth below and in the Franchise Agreement (Franchise Agreement, Article 8). You must consult your carrier representative to determine the level of coverage necessary for the Franchised Business. Higher exposures may require higher limits.
Insurance Requirements
- a) Coverage against direct physical loss or damage to real and personal property, including improvements and betterments, written on a special form peril basis, including flood and earthquake, if the relevant property is situated in a flood or earthquake zone, in an amount equal to 100% of the Franchised Business' property value;
- b) Comprehensive general liability insurance, written on an occurrence basis, extended to include contractual liability, products and completed operations, and personal and advertising injury, with a combined bodily injury and property damage limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate. There may be no products liability or completed operations exclusion. There may be no "injury to subcontractor employee," or its equivalent, exclusion. The commercial general liability policy must provide coverage to you for the hold harmless and indemnity clauses contained in your Franchise Agreement;
- c) Statutory workers' compensation insurance and employers' liability insurance as required by the law of the state in which the Franchised Business is located, including statutory workers' compensation limits and employers' liability limits of at least $1,000,000;
- d) Business automobile insurance, including liability insurance coverage for hired and non-owned automobiles, with a combined single bodily injury and property damage limit of at least $1,000,000 per occurrence;
- e) Business interruption insurance equal to 12 months of your net income and continuing expenses including Royalty Fees;
- f) Commercial umbrella liability insurance with total liability limit of at least $1,000,000;
- g) Employment practices liability insurance with a limit of at least $2,000,000, including actions of a third party and a minimum limit of $100,000 for wage and hour disputes; and
- h) All other insurance that we require in the Manuals or that is required by law or by the lease o
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–29)
What This Means (2025 FDD)
According to Beard Papas's 2025 Franchise Disclosure Document, franchisees must obtain the insurance coverage that Beard Papas requires, as detailed in the manuals and subject to modifications. The insurance policies must be written by a responsible carrier acceptable to Beard Papas, and all insurance policies (excluding workers' compensation) must name Beard Papas, its officers, directors, shareholders, partners, agents, representatives, and independent contractors as additional insureds. The insurance carrier must provide Beard Papas with at least 30 days' prior written notice in the event of any material alteration or cancellation of any insurance policy. A certificate of insurance must be furnished to Beard Papas at the earlier of 90 days after the Effective Date of the Franchise Agreement or prior to the commencement of the initial training program.
The required insurance coverage must be at least as comprehensive as the minimum requirements set forth in the Franchise Agreement. Franchisees are advised to consult with their carrier representative to determine the necessary level of coverage for their Franchised Business, as higher exposures may necessitate higher limits. The specific insurance requirements include coverage against direct physical loss or damage to real and personal property, comprehensive general liability insurance with a combined bodily injury and property damage limit of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, statutory workers' compensation insurance and employers' liability insurance with limits of at least $1,000,000, business automobile insurance with a combined single bodily injury and property damage limit of at least $1,000,000 per occurrence, business interruption insurance equal to 12 months of net income and continuing expenses including Royalty Fees, commercial umbrella liability insurance with a total liability limit of at least $1,000,000, and employment practices liability insurance with a limit of at least $2,000,000.
In addition to the coverages listed above, franchisees must also carry all other insurance that Beard Papas requires in the Manuals or that is required by law or by the lease or sublease for the Franchised Business. This comprehensive list of insurance requirements ensures that both the franchisee and Beard Papas are protected against a variety of potential risks and liabilities. The franchisee bears the cost of obtaining and maintaining these insurance policies, which are essential for the ongoing operation of the franchised business.
It is typical in the franchise industry for franchisors to mandate certain insurance coverages to protect their brand and the entire franchise system from potential liabilities. The specific types and amounts of coverage required by Beard Papas appear to be in line with standard industry practices, but prospective franchisees should carefully review these requirements with an insurance professional to ensure they understand the costs and obligations involved.