What happens if a Burros Fries franchisee's insurance lapses, is altered, or is cancelled?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
proval requests; andadminister the System Advertising Fund.
13. OBLIGATIONS OF FRANCHISEE RELATING TO INSURANCE
A. Overall Coverage Required
Before Franchisee opens a Burros & Fries Franchised Business, Franchisee must purchase insurance coverage from a responsible carrier with a performance rating of A or higher as rated in the most recent edition of Best Insurance Reports (or comparable criteria as we may specify) and Franchisee must maintain such insurance throughout the duration of the initial term of the Franchise Agreement and any renewal terms. Franchisee shall list us as additional insured on all its insurance policies. Franchisee will procure and maintain general liability insurance with a minimum policy limit of $2,000,000 per occurrence and $4,000,000 aggregate (this policy should include general tort, premises damage, personal advertising injury and product liability insurance which covers Franchisee for damages that result in injury from products Franchisee distributes). Plus, property and casualty insurance with a minimum policy limit of $2,000,000 or an amount specified by the us.
Franchisee must also procure and maintain "All Risks" or "Special Form" insurance (coverage for the full cost of replacement of the premises and all other property); employer liability insurance, automobile liability insurance with coverage of owned and hired vehicles with minimum coverage in amounts not less than $100,000 combined single limit for bodily and property damage (or what is in accordance with Franchisee's state guidelines); business interruption insurance to fully insure loss of earnings for a period of one
Source: Item 22 — CONTRACTS (FDD page 53)
What This Means (2024 FDD)
Based on the 2024 Franchise Disclosure Document, Burros Fries requires franchisees to maintain specific insurance coverage throughout the term of their Franchise Agreement and any renewals. This includes listing Burros Fries as an additional insured on all policies. The required insurance includes general liability insurance with a minimum policy limit of $2,000,000 per occurrence and $4,000,000 aggregate, property and casualty insurance with a minimum policy limit of $2,000,000 or an amount specified by Burros Fries, "All Risks" or "Special Form" insurance, employer liability insurance, automobile liability insurance with minimum coverage of $100,000, business interruption insurance to fully insure loss of earnings for a period of one-hundred and eighty (180) days or longer as may specify, and statutory workers' compensation insurance with limits of greater than $100,000 or the minimum limits required by law. These policies must be purchased from a responsible carrier with a performance rating of A or higher as rated in the most recent edition of Best Insurance Reports (or comparable criteria as Burros Fries may specify).
The FDD does not explicitly state the consequences of a lapse, alteration, or cancellation of the required insurance coverage. Typically, franchise agreements include provisions that allow the franchisor to take corrective action if a franchisee fails to maintain the required insurance. This might involve the franchisor obtaining insurance on the franchisee's behalf and charging the franchisee for the cost, or it could lead to a notice of default and potential termination of the franchise agreement if the franchisee does not rectify the situation promptly.
Prospective Burros Fries franchisees should clarify with the franchisor the specific repercussions of failing to maintain the required insurance coverage. Understanding the potential consequences will help franchisees ensure they remain compliant with the Franchise Agreement and avoid any disruptions to their business operations. It is crucial to discuss what steps Burros Fries might take if insurance coverage lapses or is altered, and what recourse the franchisee has to remedy the situation.