Can Burros Fries specify a longer period of interruption coverage for business interruption insurance?
Burros_Fries Franchise · 2024 FDDAnswer from 2024 FDD Document
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- Business Interruption insurance in such amount as will reimburse you for direct or indirect loss of earnings attributed to all perils commonly insured against by prudent business owners (including lost royalties, system advertising and other fees due to us and/or our affiliates), or attributable to prevention of access to the Business, with coverage for a period of interruption of one hundred eighty (180) days and such longer period as we may specify periodically. Business interruption insurance is required with liability limits of amounts we may reasonably specify which will relate to the right to be reimbursed for direct or indirect loss of earnings attributed to all perils commonly insured against by prudent business owners.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 21–25)
What This Means (2024 FDD)
According to Burros Fries's 2024 Franchise Disclosure Document, franchisees are required to obtain business interruption insurance. This insurance should reimburse franchisees for direct or indirect loss of earnings due to perils commonly insured against, including lost royalties, system advertising, and other fees. It also covers prevention of access to the business.
The standard coverage period for business interruption insurance is 180 days. However, Burros Fries retains the right to specify a longer coverage period periodically. The liability limits for this insurance will be amounts that Burros Fries may reasonably specify, relating to the reimbursement for direct or indirect loss of earnings attributed to perils commonly insured against by prudent business owners.
This means that while the initial requirement is for 180 days of coverage, Burros Fries can mandate a longer period, potentially increasing the cost of the insurance for the franchisee. Franchisees should be aware of this potential change and factor it into their financial planning. It is important for prospective franchisees to discuss with Burros Fries what factors might lead to requiring a longer coverage period and how that might affect insurance costs.