What are the consequences if a Caring Transitions franchisee fails to maintain adequate insurance coverage?
Caring_Transitions Franchise · 2025 FDDAnswer from 2025 FDD Document
ployee Dishonesty & Client Theft Insurance with a minimum limit of $25,000.
Franchisee shall maintain such other insurance as may be required by statute or rule of the state or locality in which the franchised business is located and operated and by any lease to which Franchisee is a party. All policies of insurance that Franchisee is required to maintain hereunder (except for the Workers' Compensation Insurance) shall have a deductible of not more than $1,000 and shall name Franchisor as an additional insured. All insurance shall be placed with an insurance carrier or carriers approved in writing by Franchisor and shall not be subject to cancellation except upon thirty days written notice to Franchisor. Franchisee shall submit to Franchisor, before commencing business, certifications of insurance (with a copy of the original policy attached) and a workers' compensation certificate of premium payment, showing full compliance with the requirements of this paragraph, and shall keep current certifications on deposit with Franchisor at all times during the term of this agreement. Franchisee shall not open or operate the franchised business until and unless Franchisee has complied and remains in compliance with all of the requirements of this paragraph. If Franchisee fails to comply with these requirements, Franchisor may (but shall not be obligated to) obtain the required insurance and keep it in force and effect, and Franchisee shall pay Franchisor, upon demand, the cost thereof, together with interest thereon at the rate of eighteen percent (18%) per annum, or the highest rate allowed by law, whichever is less. Franchisor, upon not less than thirty (30) days written notice to Franchisee, may reasonably increase the minimum coverage for any insurance required hereunder, decrease the maximum deductible, or require different or additional kinds of insurance coverage to reflect inflation, changes in standards of liability, higher damage awards, or other relevant changes in circumstances. The terms of this paragraph shall survive the expiration, termination, or cancellation of this agreement.
(c) The insurance required by subparagraph (b) above is for Franchisor's protection. Franchisee is advised to consult with its own insurance agents and legal counsel to determine what types and levels of insurance protection may be needed or
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, a franchisee must maintain specific insurance coverage. This includes any insurance required by state or local statutes, as well as any lease agreements. All policies, except for Workers' Compensation, must have a deductible of no more than $1,000 and must name Caring Transitions as an additional insured. The insurance must be placed with a carrier approved in writing by Caring Transitions and cannot be canceled without thirty days' written notice to Caring Transitions.
If a Caring Transitions franchisee fails to comply with these insurance requirements, they cannot open or operate their franchised business. Furthermore, Caring Transitions has the option, but not the obligation, to obtain the required insurance to keep it in effect. If Caring Transitions chooses to do so, the franchisee must pay Caring Transitions upon demand for the cost of the insurance, along with interest at a rate of 18% per annum, or the highest rate allowed by law, whichever is less.
Caring Transitions also retains the right to reasonably increase the minimum coverage, decrease the maximum deductible, or require different or additional kinds of insurance coverage with thirty days written notice to the franchisee. These changes can be made to reflect inflation, changes in liability standards, higher damage awards, or other relevant changes in circumstances. These insurance terms survive the expiration, termination, or cancellation of the franchise agreement.
The FDD advises franchisees to consult with their own insurance agents and legal counsel to determine what types and levels of insurance protection may be needed in addition to the minimum requirements set by Caring Transitions. The insurance required by Caring Transitions is primarily for the franchisor's protection, and franchisees may need additional coverage for their own protection.