May the Burros Fries franchisor require the franchisee to obtain professional liability insurance, employment practices liability insurance, employee dishonesty insurance and crime insurance?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
uired by law and as required by the lease. It is Franchisee's responsibility to obtain certificates of insurance from the contractor prior to the initiation of any construction.
To the extent available, we may require Franchisee to obtain: professional liability insurance (covers Franchisee for damages that do not result in property damage or bodily injury), employment practices liability insurance, employee dishonesty insurance and crime in
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, the franchisor may require franchisees to obtain certain types of insurance. Specifically, Burros Fries may require professional liability insurance (covering damages not resulting in property damage or bodily injury), employment practices liability insurance, employee dishonesty insurance, and crime insurance.
The FDD states that if Burros Fries requires these insurances, the policy limits would be $1,000,000 or another amount specified by the franchisor. This implies that while these insurance types are not mandatory across the board, Burros Fries reserves the right to mandate them for individual franchisees under certain circumstances.
For a prospective Burros Fries franchisee, this means they should be prepared for the potential cost of these additional insurance policies. During due diligence, it would be prudent to discuss with the franchisor under what conditions these insurance requirements might be imposed and to factor the potential costs into their financial projections. Understanding the specific triggers for these requirements can help a franchisee better manage their risk and budget accordingly.