Is additional liability coverage needed for delivery services for a Carls Jr. franchise?

According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are required to obtain automobile liability coverage, including coverage for owned, leased, non-owned, and hired vehicles, with a combined single limit of no less than $1,000,000 per accident. The FDD explicitly states that franchisees need to acquire 'additional liability coverage as needed for delivery services.' This coverage may be included as part of a package policy.

This requirement means that if a Carls Jr. franchisee offers delivery services, they must ensure their insurance policy includes additional coverage to address the specific risks associated with delivery, such as accidents involving delivery drivers or damage to customer property during delivery. The franchisee is responsible for determining the appropriate level of additional coverage needed to adequately protect the business from potential liabilities arising from delivery operations.

Carls Jr. also stipulates that all insurance policies must be written by an insurance company satisfactory to them and meet the standards, specifications, coverages, and limits outlined in the Operations Procedures Manual (OPM) or otherwise provided in writing. Franchisees must provide 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, or by the date the franchisee takes possession of the Franchised Location, or by the date construction commences at the Franchised Location, if the franchisee is contractually obligated for the construction. On each policy renewal date thereafter, the franchisee must again submit evidence of satisfactory insurance and proof of payment to Carls Jr.

It is important for prospective Carls Jr. franchisees to consult with an insurance professional to assess their specific delivery-related risks and determine the appropriate amount of additional liability coverage needed to comply with Carls Jr.'s requirements and adequately protect their business. Franchisees should also ensure that their insurance policies meet all of Carls Jr.'s general requirements, such as being primary and non-contributory, extending to the obligations and liabilities of the franchisee to third parties, and being written by a company with an 'A- VIII' or better rating by A.M. Best Company.