If a Carvel franchisee obtains a claims made policy for Employment Practices Liability insurance, what tail coverage requirements must they meet after the expiration or termination of the Franchise Agreement?
Carvel Franchise · 2025 FDDAnswer from 2025 FDD Document
If you obtain a claims made policy, you must provide a tail coverage policy for no less than one year after the expiration or termination of this Agreement or the closure of the Franchised Business, whichever occurs first. The tail coverage limits must be equal to, or greater than, the limits provided in the prior policy.
Source: Item 23 — Receipts (FDD pages 100–353)
What This Means (2025 FDD)
According to Carvel's 2025 Franchise Disclosure Document, if a franchisee chooses to obtain a claims made policy for Employment Practices Liability insurance, they must adhere to specific tail coverage requirements after the franchise agreement expires or terminates.
Specifically, the Carvel franchisee is required to provide a tail coverage policy for a minimum of one year. This one-year period starts after the expiration or termination of the Franchise Agreement, or after the closure of the Franchised Business, whichever event occurs first.
Furthermore, the tail coverage limits must be equal to or greater than the limits that were provided in the prior Employment Practices Liability insurance policy. This ensures that the franchisee maintains adequate coverage even after the business ceases operations or the agreement ends, protecting against potential claims that may arise from past employment practices.