What can Caring Transitions do if a franchisee fails to obtain or maintain the required insurance?
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 s
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 41–49)
What This Means (2025 FDD)
According to Caring Transitions' 2025 Franchise Disclosure Document, franchisees are required to maintain specific insurance coverage, including naming Caring Transitions as an additional insured on all policies except Workers' Compensation. Franchisees must provide certifications of insurance and workers' compensation premium payment to Caring Transitions before commencing business and keep these certifications current throughout the term of the agreement.
If a franchisee fails to meet these insurance requirements, Caring Transitions has the option, but not the obligation, to obtain the necessary insurance coverage themselves and keep it in effect. If Caring Transitions chooses to do so, the franchisee is responsible for reimbursing Caring Transitions for the cost of the insurance.
Furthermore, the franchisee will be charged interest on the insurance cost at a rate of eighteen percent (18%) per annum, or the highest rate allowed by law, whichever is less. Caring Transitions can also adjust the minimum coverage, deductible amounts, or require different or additional insurance types with 30 days written notice to the franchisee to reflect changes in liability standards, inflation, or other relevant circumstances. These insurance obligations remain in effect even after the franchise agreement expires or is terminated.