Can Carvel change the minimum amounts of insurance coverage required for franchisees?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
You must obtain and maintain during the term of your Franchise Agreement, at your expense, a comprehensive business insurance program, including property, commercial general liability, automobile liability, business property, umbrella, workers' compensation, employment practices liability, cyber liability, and (if you serve alcohol) dram shop liability insurance.
The types and minimum amounts of insurance coverage that we currently require are described in Section 13.2 of the Franchise Agreement but are subject to change.
We may obtain a master insurance policy on behalf of the System for certain types of coverage and require you to pay all or a portion of your proportionate share of coverage under the master policy to us or our Approved Supplier.
Source: Item 7 — Estimated Initial Investment (FDD pages 42–52)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, Carvel franchisees must obtain and maintain a comprehensive business insurance program during the term of their Franchise Agreement. This includes property, commercial general liability, automobile liability, business property, umbrella, workers' compensation, employment practices liability, cyber liability, and (if applicable) dram shop liability insurance.
The FDD specifies that the types and minimum amounts of insurance coverage Carvel currently requires are detailed in Section 13.2 of the Franchise Agreement. However, these minimum coverage amounts are subject to change. This means that Carvel retains the right to adjust the required insurance coverage levels during the franchise term.
Carvel also has the option to obtain a master insurance policy on behalf of the entire franchise system for certain types of coverage. If Carvel exercises this option, franchisees may be required to pay their proportionate share of the coverage under the master policy to Carvel or its Approved Supplier.
Prospective Carvel franchisees should carefully review Section 13.2 of the Franchise Agreement to understand the current insurance requirements and consider the potential financial impact if Carvel increases the minimum coverage amounts during the franchise term. Franchisees should also inquire about the possibility of participating in a master insurance policy and compare the costs and benefits of this option with obtaining individual coverage.