For Boulder Designs franchisees, must the insurance company providing policies be licensed in the state where the franchisee operates?
Boulder_Designs Franchise · 2025 FDDAnswer from 2025 FDD Document
below. All
policies (except any workers' compensation insurance) shall expressly name Franchisor as additional insured's or loss payees and shall contain a waiver of all subrogation rights against Franchisor and its successors and assigns. In addition to any other insurance that may be required by applicable law, or by lender or lessor, Franchisee shall procure:
- a. "all risk" property insurance, including business interruption insurance, customarily obtained by similar businesses in your general area to cover, at a minimum, all assets including inventory, furniture, fixtures, equipment, supplies and other property used in the operation of your Boulder Designs Business; and
- b. General commercial liability insurance in an amount of not less than $1,000,000 per occurrence with a $2,000,000 general aggregate; and
- c. Comprehensive general liability insurance, including products and contractual, in an amount of not less than $30,000 per occurrences with a $30,000 general aggregate; and
- d. Workers' compensation insurance for statutory limits and employer's liability insurance in an amount not less than $500,000; and
- e. Vehicle replacement insurance to cover the cost of acquiring a replacement vehicle, typically around $30,000; and
- f. Automobile liability coverage, including coverage of owned, non-owned and hired vehicles with coverage in amounts not less than $1,000 combines single limit.
- g. Franchisor's insurance requirements, including types of coverages and amount may change over time.
Section 15.2 Future Increases
Franchisor has the right to reasonably increase the minimum liability protection requirement annually and require different or additional insurance coverage(s) to reflect inflation, changes in standards of liability, future damage awards or other relevant changes in circumstances.
Section 15.3 Additional Insured; Certificates of Coverage
All insurance policies procured and maintained by Franchisee pursuant to this Agreement shall (a) name Franchisor as an additional insured;
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Boulder Designs' 2025 Franchise Disclosure Document, the FDD does not explicitly state that the insurance company providing policies to franchisees must be licensed in the state where the franchisee operates. However, Boulder Designs requires franchisees to maintain several types of insurance coverage. These include 'all risk' property insurance, general commercial liability insurance of at least $1,000,000 per occurrence with a $2,000,000 general aggregate, comprehensive general liability insurance of not less than $30,000 per occurrence with a $30,000 general aggregate, workers' compensation insurance for statutory limits and employer's liability insurance of at least $500,000, vehicle replacement insurance around $30,000, and automobile liability coverage of not less than $1,000 combined single limit.
Franchisees must name Boulder Designs as an additional insured on all insurance policies, waive any right to claim against Boulder Designs, and provide 30 days' advance notice of any policy cancellation or material change. Franchisees must also provide certificates of coverage to Boulder Designs at least annually. If a franchisee fails to provide proof of insurance, Boulder Designs has the right to purchase insurance on behalf of the franchisee, and the franchisee must reimburse Boulder Designs for all expenses and premiums paid.
While the FDD outlines the types and amounts of insurance coverage required, it does not specify that the insurance carrier must be licensed in the franchisee's state. A prospective Boulder Designs franchisee should confirm with the franchisor whether there are specific requirements or preferred providers for insurance coverage to ensure compliance with all contractual obligations.