Is additional liability coverage needed for delivery services at a Carls Jr. franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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.
CJR requires Franchisee to offer delivery services only through CJR's designated providers to customers in Franchisee's market. On or before the Opening Date of the Franchised Restaurant opens, Franchisee agrees to enter into the OLO Authorized Operator Agreement with Olo, Inc. Franchisee further agrees to enter into any participation agreement required with CJR's designated delivery providers at the same time (currently, the approved delivery providers are Uber Eats, Door Dash, and GrubHub). Unless CJR provides its prior written consent, Franchisee agrees that it will not provide its own delivery service or use its employees to deliver orders to Franchisee's customers.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are required to maintain automobile liability coverage that includes additional liability coverage as needed for delivery services. This coverage must include owned, leased, non-owned, and hired vehicles, with a combined single limit of not less than $1,000,000 per accident. This coverage may be included as part of a package policy.
Carls Jr. requires franchisees to offer delivery services only through its designated providers. Franchisees must enter into an OLO Authorized Operator Agreement with Olo, Inc. and any participation agreement required with Carls Jr.'s designated delivery providers, such as Uber Eats, Door Dash, and GrubHub. Franchisees are prohibited from providing their own delivery service or using their employees for deliveries unless they obtain prior written consent from Carls Jr.
The franchisee must ensure that all insurance policies are written by an insurance company satisfactory to Carls Jr. and comply with the standards, specifications, coverages, and limits set forth in the OPM or otherwise provided in writing. The franchisee must submit evidence of satisfactory insurance and proof of payment to Carls Jr. no later than 30 days prior to the scheduled opening date of the Franchised Restaurant, the date the franchisee takes possession of the Franchised Location, or the date construction commences at the Franchised Location.
This requirement ensures that Carls Jr. franchisees have adequate protection against potential liabilities arising from delivery services, which is particularly important given the risks associated with vehicle accidents. Franchisees should carefully review their insurance policies to confirm they meet the required coverage limits and include the necessary additional liability coverage for delivery services. Franchisees should also confirm that their insurance policies meet all of Carls Jr.'s requirements, including the minimum rating by A.M. Best Company and the waiver of subrogation endorsement in favor of Carls Jr. and its affiliates.