What happens if a Checkers franchisee fails to maintain the required insurance?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
er you received advice from us on any of these subjects. You may not recruit or hire any person who is a management level employee of ours or of any Restaurant operated by us, our Affiliates or another franchisee of ours without obtaining the employer's consent, which consent may be withheld for any reason or no reason.
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.
The minimum amount of liability coverage we prescribe from time to time in no way limits your liability to such minimum amounts. We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverage (including reasonable excess liability insurance) at any time to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances.
At our request, you must furnish us with such evidence of insurance coverage and payment of premiums as we require. If you fail or refuse to maintain any required insurance coverage, or to furnish satisfactory evidence thereof, we, at our option and in addition to our other rights and remedies hereunder, may obtain such insurance coverage on your behalf. If we do so, you must fully cooperate with us in our effort to obtain such insurance policies and pay us any costs and premiums we incur.
Your obligation to maintain insurance coverage is not diminished in any manner by reason of any separate insurance we may choose to maintain, nor does it relieve you of your obligations under Section 17.02.
- 9.08 Social Media Sites.
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees are required to maintain specific insurance coverage during the term of their agreement. These include general liability, automobile, umbrella, property, workers' compensation, employer's liability, employment practices liability, and cyber insurance. The insurance policies must be issued by carriers approved by Checkers, meet minimum coverage amounts and deductible requirements, name Checkers as an additional insured, provide 30 days' notice for cancellation or modification, and include a waiver of subrogation.
If a Checkers franchisee fails to maintain the required insurance and does not correct this failure within ten days after receiving written notice from Checkers, it constitutes a breach of the franchise agreement. In addition to other remedies, Checkers has the option to obtain the necessary insurance coverage on behalf of the franchisee. The franchisee is then responsible for fully cooperating with Checkers in obtaining the insurance policies and paying all associated costs and premiums.
Furthermore, the FDD states that the minimum amount of liability coverage Checkers prescribes does not limit the franchisee's liability. Checkers may also periodically increase the required coverage amounts or require different or additional insurance coverage to reflect changes in circumstances such as inflation or the identification of new risks. Failing to adhere to these insurance requirements can lead to Checkers taking corrective action and charging the franchisee for the costs, potentially impacting the franchisee's financial stability and overall compliance with the franchise agreement.
This requirement to maintain insurance is typical in franchising, as it protects both the franchisee and the franchisor from potential liabilities and financial losses. The franchisee's obligation to maintain insurance is not diminished by any separate insurance Checkers may choose to maintain, nor does it relieve the franchisee of their indemnification obligations to Checkers.