What is the minimum property insurance coverage required for a Big Apple Bagels franchise, and what does it cover?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
e, muffins, sandwiches, and/or coffee, as well as any other items or products that Franchisee is authorized to sell subsequent to the date of this Agreement, to the public through retail or wholesale channels of distribution.
g. Insurance.
- i. During the term of the Franchise, Franchisee shall maintain in force, under policies of insurance issued by carriers duly admitted in the Store's state, with an A.M. Best rating not less than A-, and acceptable to Franchisor, comprehensive general liability and property damage insurance against claims for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the BAGELS Store, or otherwise in conjunction with the conduct of business by Franchisee pursuant to the Franchise Agreement, under one or more policies of insurance containing coverage for: Workers Compensation including Employers Liability in the limit of no less than $500,000; Comprehensive General Liability of no less than $1,000,000 per occurrence with a General Aggregate of no less than $2,000,000.00; Products Liability of $2,000,000; Employment Practices Liability of no less than $500,000, Cyber Liability of no less than $1,000,000; Property Insurance in the amount of the replacement cost for stock, inventory, equipment and improvements and betterments; Business Interruption in an amount equal to at least twelve (12) months of gross revenue; and coverage for equipment breakdown in the minimum amount of $25,000, and an Umbrella Policy of no less than $1,000,000. In addition, if Franchisee uses a vehicle to deliver product or supplies, he must maintain Comprehensive Auto Liability coverage of no less than $1,000,000. Further, if any employee of Franchisee ever uses a vehicle for company business, the Comprehensive General Liability insurance must include "Hired and Non-Owned" automobile liability coverage of no less than $1,000.000. The cost of insurance will vary based on the types and limits of the insurance Franchisee purchases and other factors affecting risk exposure. Franchisor may periodically increase the amounts of coverage required under such insurance policies and require
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, franchisees must maintain property insurance to cover the replacement cost of stock, inventory, equipment, improvements, and betterments. This insurance ensures that in the event of damage or loss, the franchisee can replace essential business assets, allowing them to resume operations.
In addition to property insurance, Big Apple Bagels requires franchisees to carry other types of insurance, including Workers Compensation with a limit of no less than $500,000, Comprehensive General Liability of no less than $1,000,000 per occurrence with a General Aggregate of no less than $2,000,000.00, Products Liability of $2,000,000, Employment Practices Liability of no less than $500,000, Cyber Liability of no less than $1,000,000, Business Interruption insurance equal to at least twelve (12) months of gross revenue, equipment breakdown coverage in the minimum amount of $25,000, and an Umbrella Policy of no less than $1,000,000. If the franchisee uses a vehicle to deliver products or supplies, they must also maintain Comprehensive Auto Liability coverage of no less than $1,000,000.
Big Apple Bagels also stipulates that the insurance policies must be issued by carriers duly admitted in the store's state with an A.M. Best rating not less than A- and acceptable to the franchisor. Furthermore, BAB Systems, Inc. must be named as an additional insured on a primary and noncontributory basis, and the policies must provide for thirty days' prior written notice to the franchisor of any material modification, cancellation, or expiration. The franchisor may periodically increase the required coverage amounts or require different or additional kinds of insurance to reflect changes in circumstances such as inflation or the identification of new risks.