Does the FDD specify who is responsible for insurance costs for a Bhc Restaurant?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
cleaning supplies, promotional material, and other supplies.
- (7) Insurance. The Affiliate Franchisee must carry insurance policies protecting you, us, and our affiliates. The insurance policy or policies must meet the standards and specifications (including minimum coverage amounts) outlined in writing by us from time to time, and, at a minimum, must include the following (except as different coverages and policy limits may be specified for all franchisees from time to time in writing): (i) "special" causes of loss coverage forms (sometimes called "All Risk coverage" or "All Peril coverage") on the Affiliate Franchised BHC Restaurant, Restaurant improvements, furniture, fixtures, equipment, supplies and other property used in the operation of the Affiliate Franchised BHC Restaurant, for full repair and replacement value, except that an appropriate deductible clause is permitted; (ii) business interruption insurance covering a minimum 12 months loss of income, including coverage for our Royalty Fees (for example, in the event of a fire or destruction of the premises, the insurance must cover our average royalty payments (based on the previous 12 month timeframe, or if a shorter timeframe, the total operations timeframe for the Affiliate Franchised BHC Restaurant) during the rebuilding process); (iii) comprehensive general liability insurance, including product liability insurance and contractual liability insurance; (iv) workers' compensation covering all of Affiliate Franchisee employees; (v) motor vehicle insurance; (vi) umbrella liability insurance which also includes employers liability; (vii) "Per Location" aggregate limits when multiple Restaurant locations are insured under one comprehensive general liability and umbrella liability policy(cies); (viii) we must be named as an additional insured on all liability policies; (ix) severability of interests or separation of insureds provisions must be included in the liability policies and all policies must be primary and noncontributing with any insurance policy carried by us; and (x) any other such insurance coverages or amounts as required by law or other agreement related to the Affiliate Franchised BHC Restaurant. We may from time to time modify the required minimum limits (including an increase to the umbrella policy referenced in (vi) above) and require additional insurance coverages by providing written notice to you, as conditions require, to reflect changes in relevant circumstances, industry standards, experiences in the System, standards of liability and higher damage awards.
Source: Item 7 — Estimated Initial Investment: (FDD pages 18–25)
What This Means (2025 FDD)
According to Bhc's 2025 Franchise Disclosure Document, the affiliate franchisee is responsible for securing and maintaining the required insurance coverage for the restaurant. Item 7 outlines that the franchisee must carry insurance policies to protect themselves, Bhc, and its affiliates. This includes covering the restaurant, improvements, furniture, equipment, and supplies.
The insurance policies must meet the standards and specifications that Bhc outlines in writing, including minimum coverage amounts. The required insurance includes special causes of loss coverage, business interruption insurance, comprehensive general liability insurance, workers' compensation, motor vehicle insurance, and umbrella liability insurance. Bhc must be named as an additional insured on all liability policies, and the policies must include severability of interests provisions.
The FDD specifies that if the affiliate franchisee fails to maintain the required insurance coverage, Bhc has the right, but not the obligation, to procure insurance and charge the costs to the franchisee, including a reasonable fee for expenses incurred. The cost of insurance will vary depending on factors such as the size and location of the development area, the levels and type of insurance purchased, and past claims. Bhc may also modify the required minimum insurance limits and require additional coverages by providing written notice to the franchisee.