Does Better Blend require a waiver of subrogation in favor of the franchisor and its affiliates?
Better_Blend Franchise · 2024 FDDAnswer from 2024 FDD Document
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- B. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Brand Standards Manual, which includes (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, for full repair and replacement value (subject to a reasonable deductible); (ii) Business Interruption Insurance covering at least 12 months of income; (iii) 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, (iv) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000, and (v) Workers Compensation coverage as required by state law. Your policies (other than Workers Compensation) must list us and our affiliates as an additional insured, must include a waiver of subrogation in favor of us and our affiliates, must be primary and non-contributing with any insurance carried by us or our affiliates, and must stipulate that we receive 30 days' prior written n
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 17–20)
What This Means (2024 FDD)
According to Better Blend's 2024 Franchise Disclosure Document, franchisees are required to obtain specific insurance policies, and these policies (excluding Workers Compensation) must include a waiver of subrogation in favor of Better Blend and its affiliates. This means that if Better Blend or its affiliates are responsible for a loss covered by the franchisee's insurance, the insurance company cannot seek to recover the claim payment from Better Blend or its affiliates.
In addition to the waiver of subrogation, the franchisee's insurance policies must list Better Blend and its affiliates as additional insureds. The policies must also be primary and non-contributing with any insurance carried by Better Blend or its affiliates, meaning the franchisee's insurance must pay out first in the event of a claim. Furthermore, the insurance policies must stipulate that Better Blend receives 30 days' prior written notice of cancellation.
These insurance requirements are common in franchising to protect the franchisor from liability related to the franchisee's operations. The waiver of subrogation is a significant protection for Better Blend, as it prevents the franchisee's insurance company from pursuing claims against them, even if Better Blend's negligence contributed to the loss. Franchisees should carefully review these insurance requirements with their insurance provider to ensure they can comply and understand the implications of the waiver of subrogation.