What general requirements apply to each insurance policy that a Carls Jr. franchisee is required to maintain?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
er Liability (network security/data privacy) with policy limits not less than $1,000,000 per occurrence.
- (6) In connection with any construction, leasehold improvements, renovation, refurbishment, or remodeling of the Franchised Restaurant, Franchisee's general contractor shall maintain Commercial General Liability insurance (with products liability and independent contractors coverage), Automobile Liability coverage for owned, leased, hired and non-owned vehicles, and Builder's Risk with limits no less than $1,000,000, with CJR named as an additional insured, as well as Workers' Compensation and Employer's Liability as required by state law.
CJR may regulate the types, amounts, terms and conditions of insurance coverage required for the Franchised Restaurant, and standards for underwriters of policies providing required insurance coverage, including: (a) CJR's protection and rights under these policies as an additional insured or loss payee; (b) required or permissible insurance contract provisions; (c) assignment of policy rights to CJR; (d) periodic
verification of insurance coverage that must be furnished to CJR and; (e) similar matters related to insured and uninsured claims. Franchisee shall receive written notice of such modifications and shall take prompt action to comply.
- C. The following general requirements shall apply to each insurance policy that Franchisee is required to maintain under this Agreement:
- (1) Each insurance policy shall be specifically endorsed
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 FDD, Carls Jr. franchisees must adhere to specific general requirements for each insurance policy they maintain. These policies must be endorsed to ensure that the franchisee's coverage is primary, and any insurance held by additional insured parties or loss payees is considered excess and non-contributory. This means that in the event of a claim, the franchisee's policy will be the first one to respond. The insurance policies cannot include any provisions that limit or reduce coverage for the franchisee if Carls Jr. or its affiliates file a claim.
The insurance coverage must extend to cover all obligations and liabilities the franchisee has to third parties, as well as any items for which the franchisee is required to indemnify Carls Jr. under the Franchise Agreement. Each policy must be underwritten by an insurance company with a rating of "A- VIII" or better from A.M. Best Company (or another rating service designated by Carls Jr.) and must be satisfactory to Carls Jr. The deductible amount for any policy cannot exceed $100,000 unless Carls Jr. provides written approval for a higher deductible.
Furthermore, each insurance policy must include a waiver of subrogation endorsement in favor of Carls Jr. and its affiliates, preventing the insurance company from pursuing Carls Jr. for recovery of claim payments. For Commercial General Liability, Automobile Liability, and Umbrella/Excess Liability policies, Carls Jr. and its affiliates must be named as additional insured parties on a primary and non-contributory basis. For Commercial Property coverage, Carls Jr. and its affiliates must be named as loss payees. These requirements ensure that Carls Jr. is protected and has recourse in the event of any claims or losses related to the franchisee's operations.