What is the minimum required coverage for equipment breakdown insurance for a Big Apple Bagels franchise?
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 equipment breakdown insurance with a minimum coverage of $25,000. This insurance is part of a broader set of required coverages that Big Apple Bagels franchisees must secure during the term of their franchise agreement.
In addition to equipment breakdown coverage, Big Apple Bagels requires franchisees to hold comprehensive general liability and property damage insurance. This includes coverage for worker's compensation ($500,000 minimum), general liability ($1,000,000 per occurrence with a $2,000,000 general aggregate), products liability ($2,000,000), employment practices liability ($500,000 minimum), cyber liability ($1,000,000 minimum), property insurance (replacement cost for stock, inventory, equipment, and improvements), and business interruption insurance (equal to at least 12 months of gross revenue). Franchisees must also carry an umbrella policy of no less than $1,000,000.
If a Big Apple Bagels franchisee uses a vehicle for deliveries, they must also maintain comprehensive auto liability coverage of at least $1,000,000. Furthermore, if any employee uses a vehicle for company business, the general liability insurance must include hired and non-owned automobile liability coverage of no less than $1,000,000. The FDD states that Big Apple Bagels may periodically increase the required coverage amounts or require different or additional kinds of insurance to reflect inflation, new risks, changes in law, or higher damage awards.
It is important to note that the cost of insurance will vary depending on the types and limits of coverage purchased, as well as other factors affecting risk exposure. Franchisees are required to provide Big Apple Bagels with copies of their insurance policies and evidence of premium payments before opening their store and before the expiration of each policy term. All insurance policies must name BAB Systems, Inc. as an additional insured and provide for 30 days' prior written notice to Big Apple Bagels of any material modification, cancellation, or expiration.