What is the Bhc Master Franchisee's responsibility regarding insurance coverage relative to the Franchisor, the Owner of the Marks, and other affiliated companies?
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, the Master Franchisee has specific insurance responsibilities to protect the Franchisor, the Owner of the Marks, and their affiliated companies. Bhc requires the Master Franchisee to secure and maintain comprehensive general liability insurance, automobile insurance, and any other legally mandated or reasonably prudent insurance coverage necessary for operating the business. These policies must be in effect by the opening date and maintained throughout the term of the agreement. The specific coverage requirements, limitations, and terms are detailed in Bhc's Operations Manual.
The Master Franchisee's insurance policies must name Bhc, the Owner of the Marks, and any affiliated companies identified in writing by Bhc, along with their respective shareholders, members, managers, directors, officers, employees, and agents, as additional insureds. This ensures that these parties are protected under the Master Franchisee's insurance coverage. Furthermore, the Master Franchisee's insurance coverage is considered primary, meaning it will be the first line of defense in the event of a claim, as respects Bhc, the Owner of the Marks, and their affiliates.
Any insurance or self-insurance maintained by Bhc, the Owner of the Marks, and their affiliated companies will be excess of the Master Franchisee's insurance and will not contribute with it. This means that Bhc's insurance acts as a secondary layer of protection, only coming into play after the Master Franchisee's coverage is exhausted. The Master Franchisee must provide Bhc with copies of the insurance policies and endorsements upon issuance and renewal. This ensures that Bhc has proof of the required coverage and can verify that it meets the specified requirements. This arrangement protects Bhc and its related entities from potential liabilities arising from the Master Franchisee's operations, ensuring that the Master Franchisee bears the primary responsibility for insurance coverage.