What A.M. Best's rating must the insurers providing coverage for a Bhc Master Franchisee have?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
(a) Master Franchisee must have in effect on the Opening Date and maintain during the term of this Agreement comprehensive general liability insurance, automobile insurance, and other insurance that is legally required for Master Franchisee to operate Master Franchisee's business (i.e., workers' compensation insurance) or that is reasonably prudent for Master Franchisee's type of business. Policy coverage requirements and limitations and other terms relating to insurance will be set forth in the Operations Manual. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A: VII which are authorized to do business in the state where Master Franchised BHC Restaurant is located, unless otherwise approved in writing by Franchisor. Any policies of insurance that Master Franchisee maintains must contain a separate endorsement naming Franchisor and the Owner of the Marks (and Franchisor's other affiliated companies identified by Franchisor in writing), and their respective shareholders, members, managers, directors, officers, employees, and agents as additional insureds to the full extent of coverage provided under the insurance policies. Master Franchisee's insurance coverage will be primary as respects Franchisor, the Owner of the Marks, and other affiliated companies identified by Franchisor in writing, and their respective shareholders, members, managers, directors, officers, employees, and agents. Any insurance or self- insurance maintained by Franchisor, the Owner of the Marks, and other affiliated companies identified by Franchisor in writing, and their respective shareholders, members, managers, directors, officers, employees, and agents will be excess of
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, a Master Franchisee is required to secure insurance policies from insurers with a minimum A.M. Best's rating of A: VII. These insurers must also be authorized to conduct business in the state where the Master Franchised Bhc Restaurant is located. However, Bhc may provide written approval for exceptions to this requirement.
This insurance coverage, including comprehensive general liability and automobile insurance, must be maintained throughout the term of the Master Franchise Agreement. The policy coverage requirements and limitations are detailed in Bhc's Operations Manual. Additionally, the insurance policies must include an endorsement that names Bhc and the Owner of the Marks, along with their respective affiliates, shareholders, and personnel, as additional insureds.
The Master Franchisee's insurance coverage is considered primary, meaning it takes precedence over any insurance or self-insurance maintained by Bhc or its affiliates. The Master Franchisee is also obligated to provide Bhc with copies of the insurance policy and endorsements upon issuance and renewal. Failing to maintain the required insurance coverage constitutes a material breach of the Master Franchise Agreement, potentially leading to termination. Bhc retains the option, but not the obligation, to procure insurance on behalf of the Master Franchisee if they fail to do so, charging the Master Franchisee for the costs incurred along with a reasonable fee.