What are the insurance requirements that Browns Chicken franchisees must comply with to avoid penalties?
Browns_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
trictions of this Section 15 shall not be applicable to the ownership of shares of a class of securities listed on a stock exchange or traded on the over-the- counter market that represent one percent (1%) or less of the number of shares of that class of securities issued and outstanding.
16. INSURANCE.
During the term of the Franchise, Franchisee shall maintain in force, under policies of insurance issued by carriers approved by Brown: (1) comprehensive public and product liability insurance and motor vehicle liability insurance (including but not limited to hired and non-owned coverage) against claims brought during or after the term of the Franchise for bodily and personal injury, death and property damage caused by or occurring in conjunction with the operation of the Store or otherwise in conjunction with the conduct of business by Franchisee pursuant to the Franchise, under one or more policies of insurance containing minimum liability protection of One Million Dollars ($1,000,000) combined single limit; (2) general casualty insurance, including fire and extended coverage, vandalism and malicious mischief insurance and plate glass and general theft insurance, for the replacement value of the Store and its contents; (3) Employment Practices Liability of no less than $500,000, (4) workmen's compensation insurance as required by law; and (5) business interruption insurance for a period adequate to re-establish normal business operations. Brown may from time to time increase the minimum limits of coverage required under such insurance policies and require different or
additional kinds of insurance, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or 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 i
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 several insurance policies during the term of their franchise agreement. These policies must be issued by carriers approved by Browns Chicken.
The required insurance includes comprehensive public and product liability insurance, as well as motor vehicle liability insurance, with a minimum liability protection of $1,000,000 combined single limit. Franchisees must also carry general casualty insurance, covering fire, extended coverage, vandalism, malicious mischief, plate glass, and general theft, for the replacement value of the store and its contents. Additionally, franchisees need to maintain Employment Practices Liability insurance of no less than $500,000, workmen's compensation insurance as required by law, and business interruption insurance adequate to re-establish normal business operations.
Browns Chicken has the right to increase the minimum coverage limits or require different or additional kinds of insurance to reflect changes in circumstances such as inflation, new risks, or changes in laws. Browns Chicken must be named as an additional insured on a primary basis in each policy, and Browns Chicken must receive ten days' prior written notice of any material modification, cancellation, or expiration of the policy. Franchisees must provide Browns Chicken with a certificate of insurance evidencing continued coverage before the expiration of each policy. Failure to maintain the required insurance coverage allows Browns Chicken to obtain the insurance on behalf of the franchisee, charging the franchisee for the costs and premiums incurred, plus a 10% administration fee, which may be withdrawn from the franchisee's bank account.