Besides workers' compensation/employer's liability, who must be named as an additional insured in Carls Jr.'s liability policies?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
mounts, terms and conditions of insurance coverage required for the Franchised Restaurant, and standards for underwriters of policies providing required insurance coverage. You will receive written notice of these modifications, and you must take prompt action to comply. We, and any entity with an insurable interest designated by us, shall be an additional insured in such liability policies, except for workers' compensation/employer'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.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 37–41)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, Carls Jr. and any entity with an insurable interest designated by them must be included as an additional insured in the franchisee's liability insurance policies. This requirement excludes workers' compensation/employer's liability coverage. Additionally, when franchisees undertake construction, leasehold improvements, renovations, refurbishment, or remodeling of their restaurant, the general contractor's insurance policies must name CJR as an additional insured. These policies include Commercial General Liability, Automobile Liability, and Builder's Risk, each with limits no less than $1,000,000, as well as Workers' Compensation and Employer's Liability as required by state law.
This requirement means that Carls Jr. aims to protect itself from potential liabilities arising from the franchisee's operations. By being named as an additional insured, Carls Jr. can directly access the franchisee's insurance coverage in the event of a claim. This is a common practice in franchising, as it provides an added layer of financial security for the franchisor. The franchisee bears the cost of this insurance coverage.
For a prospective Carls Jr. franchisee, this means higher insurance costs, as adding additional insured parties typically increases premiums. It is important to factor these costs into the overall financial projections for the franchise. Franchisees should also ensure that their insurance policies meet the specific requirements outlined in the Franchise Disclosure Document and any related manuals to avoid potential breaches of the franchise agreement. The franchisee should also confirm with their insurance provider that the coverage adequately protects against potential risks associated with operating a Carls Jr. restaurant.