For which insurance policies must CJR and its affiliates be named as Additional Insured on a primary and non-contributory basis for a Carls franchise?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- (7) 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.
With respect to the Commercial Property coverage, CJR and its affiliates shall be named as Loss Payee.
- (6) In connection with any construction, leasehold improvements, renovation, refurbishment, or remodeling of the Franchised Restaurant, Franchisee's general contractor shall maintain Commercial General Liability insurance (with products liability and independent contractors coverage), Automobile Liability coverage for owned, leased, hired and non-owned vehicles, and Builder's Risk with limits no less than $1,000,000, with CJR named as an additional insured, as well as Workers' Compensation and Employer's Liability as required by state law.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, CJR and its affiliates must be named as Additional Insured on a primary and non-contributory basis for the Commercial General Liability, Automobile Liability, and Umbrella/Excess Liability policies. This requirement ensures that Carls, as the franchisor, has certain protections under the franchisee's insurance policies.
Being named as an additional insured means that CJR is entitled to coverage under these policies for liabilities arising from the operation of the Carls franchise. The "primary and non-contributory basis" clause is significant. It dictates that the franchisee's insurance policies must pay out first in the event of a claim, without seeking contribution from any other insurance policies that Carls might have. This offers Carls a direct layer of protection and reduces the risk of needing to involve its own insurance coverage in the event of a claim related to a franchised location.
In addition to the above policies, during any construction, leasehold improvements, renovation, refurbishment, or remodeling of the Franchised Restaurant, the franchisee's general contractor must maintain Commercial General Liability insurance (with products liability and independent contractors coverage) and Automobile Liability coverage for owned, leased, hired and non-owned vehicles, with CJR named as an additional insured.
This requirement is a standard practice in franchising, designed to protect the franchisor from liabilities associated with the franchisee's business operations. Franchisees should carefully review their insurance policies to ensure compliance with these requirements and understand the implications of these clauses. Franchisees should also consult with their insurance provider to ensure they obtain the correct endorsements to comply with Carls' requirements.