What minimum combined single limit per accident is required for Automobile Liability coverage, including owned, leased, non-owned and hired vehicles, for a Carls franchise?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
s liability, and loss payee for property to the extent each has an insurable interest. All insurance policies must be written by an insurance company (or companies) satisfactory to us in compliance with the standards, specifications, coverages and limits set forth in the OPM or otherwise provided to you in writing.
These required insurance policies include, at a minimum, the following: (1) Commercial General Liability insurance with policy limits not less than $5,000,000 per occurrence and in the aggregate. Coverage shall apply per location, including coverage for contractual liability, broad form property damage, personal and advertising injury, product liability and completed operations, not to exclude food-borne illness, as well as Damage to Rented Premises coverage with limits not less than $100,000; (2) Automobile Liability coverage, including owned, leased, non-owned and hired vehicles, with a combined single limit not less than $1,000,000 per accident and additional liability coverage as needed for delivery services. This may be included as part of a package policy; (3) Workers' Compensation, statutory as required by law, and Employer's Liability insurance with limits not less than $500,000, and such other insurance as may be required by the state or locality in which the Franchised Restaurant is operated. This coverage shall also be in effect for all of Franchisee's employees who participate in any of the training programs described in the Franchise Agreement; The required limits in (1) – (3) above may be satisfied through a combination of Primary and Umbrella/Excess Liability coverage. If satisfied through an Umbrella/Excess Liability coverage, the Umbrella/Excess Liability must be "following form" of the underlying Commerical General Liability, Automobile Liability and Employer's Liability coverages; (4) Commercial Property insurance that extends c
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, franchisees must maintain Automobile Liability coverage with a combined single limit of not less than $1,000,000 per accident. This coverage applies to all owned, leased, non-owned, and hired vehicles used in the Carls business. Additionally, franchisees may need to secure extra liability coverage if they offer delivery services.
This insurance requirement is fairly standard in the franchise industry, as it protects both the franchisee and Carls from significant financial losses resulting from automobile accidents. The $1,000,000 minimum limit ensures that there is sufficient coverage to handle potential liabilities, including bodily injury and property damage claims. Franchisees should consult with their insurance providers to determine the appropriate level of coverage needed, especially if they provide delivery services, which may increase their risk exposure.
Carls allows franchisees to meet the required insurance limits through a combination of primary and umbrella/excess liability coverage. If a franchisee chooses to use an umbrella/excess liability policy, it must follow the same form as the underlying Commercial General Liability, Automobile Liability, and Employer's Liability coverages. This ensures that the umbrella policy provides consistent and comprehensive protection. Franchisees must ensure that their insurance policies are written by an insurance company that Carls finds satisfactory and that the policies comply with the standards, specifications, coverages, and limits outlined in the Operations Procedures Manual (OPM) or otherwise provided in writing.
It is important for prospective Carls franchisees to factor in the cost of this insurance coverage when evaluating the overall investment required to start and operate the franchise. Failing to maintain the required insurance coverage could result in a breach of the franchise agreement and potential termination of the franchise.