Besides workers' compensation/employer's liability, who else must be named as an additional insured on the liability policies maintained by a Carls franchisee?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall be responsible for all loss or damage arising from or related to Franchisee's development and operation of the Franchised Restaurant, and for all demands or claims with respect to any loss, liability, personal injury, death, property damage, or expense whatsoever occurring upon the premises of, or in connection with the development or operation of, the Franchised Restaurant. Franchisee shall, at its sole expense, maintain in full force and effect throughout the term of this Agreement that insurance which Franchisee determines is necessary or appropriate for liabilities caused by or occurring in connection with the development or operation of the Franchised Restaurant which shall include, at a minimum, insurance policies of the kinds, and in the amounts, required by Section 15.B. CJR, and any entity with an insurable interest designated by CJR, shall be an additional insured in such liability policies, except for workers' compensation/employer's liability, and loss payee for property to the extent each has an insurable interest.
With respect to the Commercial General Liability, Automobile Liability and Umbrella/Excess Liability policies, CJR and its affiliates shall be named as Additional Insured on a primary and non-contributory basis.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, in addition to workers' compensation/employer's liability, CJR (Carl's Jr. Restaurants LLC) and any entity with an insurable interest designated by CJR must be named as additional insureds on the liability policies that a franchisee maintains. This requirement ensures that Carls, as the franchisor, is protected against potential liabilities arising from the franchisee's operations.
This requirement means that if a claim is made against a Carls franchisee, the insurance policy would also cover CJR and any other designated entity, up to the policy limits. This protects Carls from financial losses due to lawsuits or other claims related to the franchisee's business. The franchisee is responsible for ensuring that these parties are included as additional insureds on their liability policies and for providing proof of such coverage to Carls.
Carls also stipulates that all insurance policies must be written by an insurance company satisfactory to CJR and comply with the standards, specifications, coverages, and limits set forth in the OPM (Operating Procedures Manual) or otherwise provided to the franchisee in writing. This gives Carls control over the quality and extent of the insurance coverage, ensuring it adequately protects their interests. The franchisee must adhere to these requirements to remain in compliance with the franchise agreement.
Furthermore, Carls requires that with respect to the Commercial General Liability, Automobile Liability and Umbrella/Excess Liability policies, CJR and its affiliates shall be named as Additional Insured on a primary and non-contributory basis. This means that Carls's insurance coverage will not be secondary to the franchisee's coverage, and Carls's insurer will not seek contribution from the franchisee's insurer in the event of a claim. This provides an additional layer of protection for Carls and its affiliates.