What A.M. Best rating must all insurance policies maintain during the term of the Carls Jr. agreement?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
Each insurance policy shall be written by an insurance company that has received and maintains an "A- VIII" or better rating by A.M. Best Company (or another rating service designated by CJR) and that is otherwise satisfactory to CJR.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, each insurance policy that a developer (franchisee) is required to maintain must be written by an insurance company that has received and maintains an "A- VIII" or better rating by A.M. Best Company. Carls Jr. may also designate another rating service. The insurance company must also be otherwise satisfactory to Carls Jr.
This requirement ensures that the franchisee's insurance policies are with reputable and financially stable insurance providers. An A.M. Best rating of "A- VIII" indicates that the insurance company has a good ability to meet its ongoing obligations to policyholders. This protects both the franchisee and Carls Jr. from potential financial losses due to underfunded or unreliable insurance coverage.
For a prospective Carls Jr. franchisee, this means they will need to verify that their insurance provider meets this minimum rating requirement and that Carls Jr. approves of the provider. Failure to maintain the required insurance rating could result in a breach of the franchise agreement.