Does Buns On Fire need to be named as an additional insured on the franchisee's insurance policy?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
We may require you to obtain insurance coverage for other risks or increase the required amount of coverage and require different or additional insurance during the Franchise Agreement term. Premiums will depend upon the insurance carrier's charges, terms of payment and your loss history. Each insurance policy must: (1) name us and our affiliates as an additional named insureds and contain a waiver of all subrogation rights against us; (2) provide for thirty (30) days' prior written notice to us of any material modification, cancellation, or expiration of the policy; (3) provide that coverage applies separately to each insured against whom a claim is brought; (4) contain no provision which limits coverage in the event of a claim by a party who is indemnified under the Franchise Agreement; (5) be primary; and (6) extend to and provide indemnity for all obligations assumed by you under the Franchise Agreement. You must obtain our approval of your insurance carriers and provide evidence of coverage as and when we may require.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–22)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, franchisees are required to name Buns On Fire and its affiliates as additional named insureds on their insurance policies. This requirement ensures that Buns On Fire is protected against potential liabilities arising from the franchisee's operations. The insurance policy must also contain a waiver of all subrogation rights against Buns On Fire. This prevents the insurance company from pursuing Buns On Fire to recover any claims paid out due to the franchisee's actions.
In addition to being named as an additional insured, the franchisee's insurance policy must meet several other conditions. It must provide for thirty days prior written notice to Buns On Fire of any material modification, cancellation, or expiration of the policy. The coverage must apply separately to each insured against whom a claim is brought, and it cannot contain any provision that limits coverage in the event of a claim by a party who is indemnified under the Franchise Agreement. The policy must also be primary and extend to and provide indemnity for all obligations assumed by the franchisee under the Franchise Agreement.
Buns On Fire also requires franchisees to obtain their approval of insurance carriers and provide evidence of coverage as and when they may require. This allows Buns On Fire to ensure that franchisees have adequate coverage from reputable insurance providers. Furthermore, Buns On Fire retains the right to require franchisees to obtain insurance coverage for other risks or increase the required amount of coverage and require different or additional insurance during the Franchise Agreement term. This flexibility allows Buns On Fire to adapt insurance requirements as needed to address changing risks and legal requirements.
These insurance requirements are typical in franchising, as they protect the franchisor from liabilities related to the franchisee's business. Prospective Buns On Fire franchisees should carefully review the insurance requirements in the Franchise Agreement and budget for the costs of obtaining and maintaining the required coverage. They should also discuss any questions or concerns about the insurance requirements with Buns On Fire before signing the Franchise Agreement.