What article in the Buona Franchise Agreement addresses insurance requirements?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
operations on all such required policies. Workers' Compensation Insurance, General Liability, Auto Liability, and Umbrella/Excess Liability policies shall include a waiver of subrogation in favor of Franchisor. All liability insurance policies shall be written on an "occurrence" policy form. Franchisee shall be responsible for payment of any and all deductibles from insured claims under its policies of insurance. Franchisee shall not satisfy the requirements of
this Article XII unless and until certificates of such insurance, including renewals thereof, have been delivered to Franchisor. Franchisee shall not self-insure any of the insurance coverages required by this Agreement, or non-subscribe to any state's applicable workmen's compensation laws without the prior written consent of Franchisor which Franchisor may withhold. Franchisor shall have the right, at any time during the Term to increase the minimum limits of insurance coverage or otherwise modify the insurance requirements of this Agreement upon written notice in the Manuals or as otherwise prescribed by Franchisor in writing. If Franchisee shall fail to comply with any of the insurance requirements contained in this Article XII, upon written notice to Franchisee by Franchisor, Franchisor may, without any obligation to do so, procure such insurance and Franchisee shall pay Franchisor, upon demand, the cost thereof plus interest at the maximum rate permitted by law, and a reasonable administrative fee designated by Franchisor.
12.4 Primary Coverage. Franchisee agrees that all insurance policies obtained by Franchisee pursuant to this Article XII shall be primary coverage, the applicable limits of which shall be exhausted before any benefits (defense or indemnity) may be obtained under any other insurance (including selfinsurance) providing coverage to Franchisor. In the event payments are required to be made under Franchisor's own insurance policies or self-insurance (whether for defense or indemnity) before the applicable coverage limits for the insurance policies obtained by Franchisee are exhausted, then Franchisee hereby agrees to reimburse, hold harmless and indemnify Franchisor and its insurers for such payments. Franchisee shall notify its insurers of this Agreement and shall use its best efforts to obtain an endorsement on each policy it obtains pursuant to this Article XI stating as follows:
The applicable limits of this policy shall be applied and exhausted before any benefits may be obtained (whether for defense or indemnity) under any other insurance (including self-insurance) that may provide coverage to Chicago's Original Italian Beef Franchising LLC, an Illinois limited liability company and/or Five Flavors Franchising LLC. All insurance coverage obtained by Chicago's Original Italian Beef Franchising LLC and/or Five Flavors Franchising LLC shall be considered excess insurance with respect to this policy, the benefits of which excess insurance shall not be available until the applicable limits of this policy are exhausted.
- 12.5 No Limitation on Coverage. Franchisee's obligation to obtain and maintain the foregoing policy or policies of insurance in the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by Franchisor, nor shall Franchisee's performance of that obligation relieve it of liability under the indemnity provisions set forth in Article XIV of this Agreement.
- 12.6 Issuance of Insurance. Franchisee must obtain the insurance required by this Agreement no later than fifteen (15) days before the date on which any construction or build-out at the premises of the Franchised Business is commenced. The Franchised Business shall not be opened for business prior to Franchisor's receipt of satisfactory evidence that all insurance required by this Agreement is in effect. Upon obtaining such insurance, and on each policy renewal date thereafter, Franchisee shall promptly submit evidence of satisfactory insurance and proof of payment therefore to Franchisor, together with, upon request, copies of all policies and policy amendments. The evidence of insurance shall include a statement by the insurer that the policy or policies will not be canceled or materially altered without at least thirty (30) days' prior written notice to Franchisor.
**XIII.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 34–37)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Article XII of the Franchise Agreement outlines the insurance requirements for franchisees. This article mandates that franchisees must provide certificates of insurance, including renewals, to Buona as proof of coverage. Franchisees are responsible for covering any deductibles from insurance claims. Self-insurance or opting out of state workmen's compensation laws is not allowed without Buona's prior written consent.
Buona retains the right to modify insurance requirements, including increasing minimum coverage limits, by providing written notice in the Manual or other written communication. Should a franchisee fail to meet the insurance requirements outlined in Article XII, Buona has the option, but not the obligation, to procure the necessary insurance coverage. In such cases, the franchisee is responsible for reimbursing Buona for the cost of the insurance, along with interest at the maximum legal rate and a reasonable administrative fee.
Article XII also stipulates that the franchisee's insurance policies must provide primary coverage, meaning their coverage limits must be exhausted before Buona can claim benefits under any other insurance policies. Franchisees must inform their insurers about the Franchise Agreement and make their best effort to include an endorsement stating that their policy's limits must be used before any benefits are sought from Buona's insurance policies. Franchisees must obtain the required insurance no later than 15 days before starting any construction or build-out at the franchise location. The franchise cannot open for business until Buona receives satisfactory evidence that all required insurance is in effect.