Under what circumstances can Buns On Fire purchase insurance on behalf of the franchisee?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
other property in which the Franchisor may have an interest, with a replacement cost clause attached, agreed amount endorsement equal to one hundred (100%) percent replacement the value of the property, including buildout, improvement and betterments, equipment , furniture, fixtures and inventory;
(iii.) Liquor liability coverage in amounts identified in the Confidential Operations Manual or an addendum thereto if alcohol will be served.
(iv.) Employer's Liability, Workers' Compensation, and such other insurance as may be required by statute or rule of the state or locality in which Franchisee's Buns on Fire is located and operated;
(v.) Business interruption insurance in sufficient amounts to cover twelve (12) months of revenue but not less than $100,000. Franchisor shall be named as an additional insured and loss payee in an amount equal to the royalties that would have been paid based on the Gross Revenue of the Franchised Business for the preceding twelve (12) month period, or prorated for such shorter period (if the Franchised Business has not been in operation for twelve (12) months), and shall expressly provide that any interest of same therein shall not be affected by any breach of Franchisee of any policy provisions for which such certificates evidence coverage; and
(vi.) Products liability and completed operation insurance; and
(vii.) Any other insurance coverage as required by the State, Federal or local municipality in which the franchised premises is located, as required by Franchisor, or as required by the lease for the Franchised Business premises.
Franchisee may, with the prior written consent of Franchisor, elect to have reasonable deductibles in connection with the coverage required hereunder.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
The 2025 Franchise Disclosure Document for Buns On Fire does not explicitly state circumstances under which Buns On Fire can purchase insurance on behalf of the franchisee. However, it does outline the types and amounts of insurance coverage the franchisee is required to maintain.
The franchisee must secure and maintain various insurance policies, including employer's liability, workers' compensation, business interruption insurance, and products liability and completed operation insurance. The business interruption insurance must cover at least twelve months of revenue, with a minimum of $100,000, and Buns On Fire must be named as an additional insured and loss payee. The franchisee is also required to obtain any other insurance coverage mandated by state, federal, or local regulations, as well as any insurance required by the franchisor or the lease for the franchised premises.
The franchisee may elect to have reasonable deductibles with the prior written consent of Buns On Fire. The insurance coverage must extend to all individuals providing services at the franchised business and protect against the actions of patrons. Additionally, the policies must include a waiver of subrogation against Buns On Fire.
To fully understand under which specific circumstances Buns On Fire might purchase insurance on behalf of a franchisee, a prospective franchisee should directly ask the franchisor for clarification. This will help in understanding the full scope of insurance obligations and potential scenarios where the franchisor might intervene.