Does Buona's insurance coverage limit the franchisee's obligation to obtain and maintain their own insurance policies?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
ce 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. CONFIDENTIAL INFORMATION
13.1 Definition.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchisee's obligation to obtain and maintain insurance policies is not limited by any insurance that Buona may maintain. The franchisee is required to secure and maintain their own insurance coverage in the specified amounts, regardless of any insurance held by Buona. This ensures that the franchisee's insurance acts as the primary coverage.
Buona's insurance is considered excess insurance, meaning its benefits are not available until the franchisee's policy limits are exhausted. The franchisee's insurance policies must be primary, and their limits must be used up before any benefits from Buona's insurance can be applied. If Buona has to make payments under its own insurance before the franchisee's coverage limits are exhausted, the franchisee is responsible for reimbursing and indemnifying Buona and its insurers for those payments.
To ensure compliance, franchisees must notify their insurers about the agreement with Buona and try to get an endorsement stating that the franchisee's policy limits will be exhausted before any benefits are obtained from any other insurance covering Buona. This arrangement protects Buona by ensuring that the franchisee's insurance bears the initial burden of any claims, aligning with standard franchise practices where franchisees typically carry the primary insurance responsibility.