What happens if a Browns Chicken franchisee fails to maintain required insurance coverage?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
standards of liability, higher damage awards or other relevant changes in circumstances. Each insurance policy shall name Brown as an additional insured on a primary basis, and shall provide for ten (10) days prior written notice to Brown of any material modification, cancellation or expiration of such policy.
Prior to the expiration of the term of each insurance policy, Franchisee shall furnish Brown with a certificate of insurance evidencing the continuation of coverage under a similar policy for an immediately following term, and upon Brown's request, a copy of each such policy. If Franchisee fails or refuses to maintain required insurance coverage or to furnish satisfactory evidence thereof and the payment of the premiums therefor, Brown, at its option and in addition to its other rights and remedies hereunder, may obtain such insurance coverage on behalf of Franchisee and Franchisee shall fully cooperate with Brown in its effort to obtain such insurance policies, promptly execute all forms or instruments required to obtain or maintain any such insurance, allow any inspections of the Store which are required to obtain or maintain such insurance and pay to Brown, on demand, any costs and premiums incurred by Brown. In the event Brown obtains Franchisee's insurance pursuant to this paragraph, Brown may withdraw the monthly costs of insurance, plus an additional ten percent (10%) administration fee, from Franchisee's bank account, through Franchisee's Bank Draft Plan established pursuant to Paragraph 19.F.
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to Browns Chicken's 2025 Franchise Disclosure Document, franchisees are required to maintain specific insurance coverage during the franchise term. This includes comprehensive public and product liability insurance, motor vehicle liability insurance with a minimum liability protection of $1,000,000, general casualty insurance for the replacement value of the store and its contents, Employment Practices Liability of no less than $500,000, workmen's compensation insurance as required by law, and business interruption insurance. Browns Chicken can increase the minimum coverage limits or require different types of insurance to reflect changes in circumstances. Franchisees must provide Browns Chicken with a certificate of insurance before the expiration of each policy term, and each policy must name Browns Chicken as an additional insured and provide ten days' notice of any changes or cancellation.
If a Browns Chicken franchisee fails to maintain the required insurance coverage or provide satisfactory evidence of coverage and premium payment, Browns Chicken has the option to obtain the necessary insurance on behalf of the franchisee. The franchisee is obligated to cooperate fully with Browns Chicken in obtaining such insurance, including executing required forms, allowing store inspections, and paying all associated costs and premiums.
Furthermore, Browns Chicken can withdraw the monthly insurance costs, along with an additional 10% administration fee, directly from the franchisee's bank account through the Bank Draft Plan. The franchisee's obligation to maintain insurance coverage is not affected by any separate insurance maintained by Browns Chicken, nor does it relieve the franchisee of obligations under Section 24 of the Franchise Agreement. Failure to comply with insurance requirements can also result in a penalty of $100 per day, as stated in Item 22 of the Browns Chicken Franchise Disclosure Document.