What is the minimum Commercial General Liability insurance policy limit per occurrence and in the aggregate that a Carls franchisee must maintain?
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 coverage on a replacement cost basis for the Franchised Restaurant, business personal property (including electronic equipment, tenant improvements & betterments), and business income and extra expense for a minimum of 12 months
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 are required to maintain Commercial General Liability insurance with specific minimum policy limits. Carls requires a minimum of $5,000,000 per occurrence and $5,000,000 in the aggregate for Commercial General Liability insurance. This coverage must apply per location and include coverage for contractual liability, broad form property damage, personal and advertising injury, product liability, and completed operations, explicitly including food-borne illness. The policy must also include Damage to Rented Premises coverage with limits not less than $100,000.
In addition to the Commercial General Liability insurance, Carls franchisees must also maintain other types of insurance. These include Automobile Liability coverage with a combined single limit of not less than $1,000,000 per accident, covering owned, leased, non-owned, and hired vehicles, with additional coverage as needed for delivery services. Franchisees must also have Workers' Compensation as required by law, and Employer's Liability insurance with limits not less than $500,000.
The required insurance limits can be met through a combination of Primary and Umbrella/Excess Liability coverage. If using Umbrella/Excess Liability coverage, it must follow the form of the underlying Commercial General Liability, Automobile Liability, and Employer's Liability coverages. Carls also mandates Commercial Property insurance covering the Franchised Restaurant, business personal property, tenant improvements, and business income and extra expense for a minimum of 12 months or actual loss sustained. Covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%. Flood insurance is required for locations in FEMA Flood Zones beginning with the letters "A" or "V".