What are the insurance policy requirements regarding subrogation for a Bombs Away franchise?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
pecific Obligations
The following are our current specific obligations for purchases and leases:
- A. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Manual, which includes (i) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, (ii) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000, and (iii) Workers Compensation coverage as required by state law. Your policies (other than Workers Compensation) must list us and our affiliates as an additional insured, must include a waiver of subrogation in favor of us and our affiliates, must be primary and non-contributing with any insurance carried by us or our affiliates, and must stipulate that we receive 30 days' prior written not
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–17)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, franchisees are required to maintain specific insurance policies, and these policies must include a waiver of subrogation in favor of Bombs Away and its affiliates. This means that if Bombs Away or its affiliates are responsible for a loss covered by the franchisee's insurance, the insurance company cannot seek to recover the claim amount from Bombs Away or its affiliates. This requirement is designed to protect Bombs Away from potential financial liabilities arising from incidents related to the franchisee's operations.
The insurance policies Bombs Away franchisees must obtain include Commercial General Liability insurance with a minimum of $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, Business Automobile Liability insurance with a minimum of $1,000,000, and Workers Compensation coverage as required by state law. In addition to the waiver of subrogation, the policies (excluding Workers Compensation) must list Bombs Away and its affiliates as additional insureds, be primary and non-contributing with any insurance carried by Bombs Away or its affiliates, and stipulate that Bombs Away receive 30 days' prior written notice of cancellation.
The waiver of subrogation is a fairly standard requirement in franchise agreements, as it provides an added layer of protection for the franchisor. Franchisees should carefully review their insurance policies to ensure they meet all of Bombs Away's requirements, including the waiver of subrogation, and understand the implications of these requirements. Failure to comply with these insurance requirements could result in a breach of the franchise agreement.