What are the franchisee's obligations regarding insurance as outlined in Section 9.07 of the Checkers Franchise Agreement?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
9.07 Insurance. During the Term you must maintain the following categories of insurance coverage in force at your sole expense: (a) general liability; (b) automobile for owned and hired, non-owned liability; (c) umbrella including employer's liability, general liability, and automobile liability; (d) property covering the Franchised Restaurant and personal property in an amount equal to 100% of the full replacement cost of the Franchised Restaurant and personal property, and business income coverage covering twelve (12) months of actual loss sustained; (e) workers' compensation (as required by statute); (f) employer's liability; (g) employment practices liability; (h) cyber insurance; and (i) any other insurance policies, as we may determine at any time and from time to time. All insurance policies must: (1) be issued by carriers approved by us with an A.M. Best Rating of not less than A VII; (2) contain such types and minimum amounts of coverage, exclusions and maximum deductibles as we prescribe at any time and from time to time; (3) name us and our Affiliates as additional insureds for claims related to the operation of the Franchised Restaurant; (4) provide for thirty (30) days' prior written notice to us of any material modification, cancellation or expiration of such policy; (5) provide a waiver of subrogation in favor of us and our Affiliates; and (6) include such other provisions as we may require at any time and from time to time. These insurance policies must be primary to and without right of contribution from any other insurance policy purchased by us or any other indemnitee (as defined in Section 17.02 below); must not limit or reduce coverage for you if there is a claim by us or any one or more of the other indemnitees; and must extend to and provide indemnity for all of your indemnification obligations to us and the other indemnitees under this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers's 2025 Franchise Disclosure Document, Section 9.07 of the Franchise Agreement outlines the franchisee's insurance obligations. During the term of the agreement, the franchisee must maintain several categories of insurance coverage at their sole expense. These include general liability, automobile coverage for owned, hired, and non-owned vehicles, and umbrella coverage that includes employer's liability, general liability, and automobile liability.
Additionally, franchisees must secure property insurance covering the franchised restaurant and personal property for 100% of their full replacement cost, along with business income coverage for twelve months of actual loss sustained. They are also required to have workers' compensation (as required by statute), employer's liability, employment practices liability, and cyber insurance. Checkers also retains the right to require other insurance policies as they deem necessary from time to time.
All insurance policies must be issued by carriers approved by Checkers with an A.M. Best Rating of not less than A VII. The policies must contain the types and minimum amounts of coverage, exclusions, and maximum deductibles that Checkers prescribes. Checkers and its affiliates must be named as additional insureds for claims related to the restaurant's operation. The insurance policies must provide for thirty days' prior written notice to Checkers of any material modification, cancellation, or expiration, and include a waiver of subrogation in favor of Checkers and its affiliates. These policies must be primary and without right of contribution from any other insurance policy purchased by Checkers or any other indemnitee, and must not limit or reduce coverage for the franchisee if there is a claim by Checkers or any other indemnitee. The coverage must extend to and provide indemnity for all of the franchisee's indemnification obligations to Checkers and the other indemnitees under the agreement.
This comprehensive insurance requirement ensures that both the franchisee and Checkers are protected against various potential liabilities and losses. Franchisees should carefully review these requirements with their insurance providers to ensure full compliance and to understand the costs associated with maintaining the required coverage.