What are the minimum commercial general liability insurance policy limits required per occurrence and in the aggregate for a Carls franchise?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
the development and construction of a Carl's Jr. Restaurant. Supplements or amendments to the Development Guide also may contain, among other matters, minimum standards and requirements for constructing, equipping and furnishing a Carl's Jr. Restaurant. CJR reserves the right to furnish all or part of the Development Guide to Developer in electronic form or online (including by Intranet) and establish terms of use for access to any restricted portion of CJR's web site. Developer shall keep its copy of the Development Guide current and up-to-date with all additions and deletions provided by CJR and shall purchase whatever equipment and related services (including, without limitation, a DVD player, computer system, Internet service, dedicated phone line, facsimile machine, etc.) as may be
CJR TR Development Agreement – 5/24 Franchisee (Alpha Code) DMA/Area of Development – Number of Restaurants
necessary to receive these communications. If a dispute relating to the contents of the Development Guide develops, the master copy maintained by CJR at its principal offices shall control.
7. INSURANCE
Developer shall be responsible for all loss or damage arising from or related to Developer'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. Developer shall, at its sole expense, maintain in full force and effect throughout the term of this Agreement that insurance which Developer determines is necessary or appropriate for liabilities caused by or occurring
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, franchisees must maintain commercial general liability insurance with specific minimum limits. The policy must have limits of not less than $5,000,000 per occurrence and $5,000,000 in the aggregate.
This insurance coverage must apply per location and include coverage for contractual liability, broad form property damage, personal and advertising injury, product liability, and completed operations. Notably, the coverage should not exclude food-borne illness. Additionally, the policy must include Damage to Rented Premises coverage with limits not less than $100,000.
Carls requires that all insurance policies be written by an insurance company satisfactory to them and comply with the standards and specifications outlined in their operations procedures manual (OPM) or as otherwise provided in writing. The required limits may be met through a combination of primary and umbrella/excess liability coverage, provided the umbrella/excess liability coverage follows the form of the underlying commercial general liability.
For a prospective Carls franchisee, this means securing a robust commercial general liability insurance policy is essential. Franchisees should factor in the cost of this insurance, including the specific coverage requirements and limits, when evaluating the overall investment and operational expenses of the franchise. Failing to maintain adequate insurance coverage could result in a breach of the franchise agreement and potential liability for any incidents occurring at the franchised restaurant.