Must the Byrider franchisee's insurance coverage be primary to and non-contributory with respect to any other insurance purchased by the Company?
Byrider Franchise · 2025 FDDAnswer from 2025 FDD Document
B. The insurance coverage acquired and maintained by the Franchisee at its own expense, as set forth in subsection (A) of this Section 12.1 shall:
- (1) Name the Company and its designated affiliates as additional insureds;
(2) Extend to and provide indemnity for all obligations assumed by the Franchisee hereunder and all other items for which the Franchisee is required to indemnify the Company under the provisions of this Agreement;
(3) Be primary to and non-contributory with respect to any other insurance purchased by the Company;
(4) Provide, by endorsement, that the Company is entitled to receive at least thirty (30) days prior written notice of any intent to reduce policy limits, restrict coverage, cancel or otherwise alter or amend said policy.
Source: Item 23 — Receipts (FDD pages 88–335)
What This Means (2025 FDD)
According to Byrider's 2025 Franchise Disclosure Document, the insurance coverage that the franchisee acquires and maintains must be primary and non-contributory with respect to any other insurance purchased by Byrider. This means that in the event of a claim, the franchisee's insurance policy must be the first one to pay out, and it cannot seek contribution from any insurance policies held by Byrider. This requirement is part of the broader set of insurance obligations that Byrider imposes on its franchisees to standardize insurance and protect the franchisee, Byrider, and the franchisee's customers against insurable risks.
In practical terms, this condition ensures that Byrider's own insurance coverage is secondary to the franchisee's coverage. This arrangement protects Byrider from being the first point of contact for claims related to the franchisee's operations. The franchisee bears the initial responsibility for covering any liabilities arising from their business activities, which can include garage liability, worker's compensation, and other required insurance types.
This requirement is typical in franchising, where franchisors often require franchisees to maintain specific insurance coverage to protect the brand and the entire franchise system. By requiring the franchisee's insurance to be primary, Byrider reduces its own risk exposure and ensures that franchisees are directly accountable for their business operations. Franchisees must ensure they understand and can meet these insurance obligations, as failure to do so can result in termination of the franchise agreement.
Prospective Byrider franchisees should carefully review the insurance requirements outlined in the Franchise Agreement and consult with insurance professionals to ensure they can obtain the necessary coverage. Understanding the costs and responsibilities associated with these insurance requirements is crucial for assessing the overall financial viability of the franchise.