What is the minimum amount of umbrella liability insurance coverage required per occurrence and aggregate for a Checkers franchise?
Checkers Franchise · 2025 FDDAnswer from 2025 FDD Document
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Insurance
During the term of the Franchise Agreement, you must maintain the following categories of insurance coverage in force at your sole expense, all containing at least the following minimum amounts of liability coverage: (a) general liability ($1,000,000 per occurrence and $2,000,000 aggregate); (b) automobile ($1,000,000 combined single limit) for owned and hired, non-owned liability; (c) umbrella liability ($5,000,000 per occurrence and aggregate) with employer's liability, general liability, and automobile liability scheduled as underlying policies; (d) property covering the Franchised Restaurant and personal property in an amount 100% of the full replacement cost of the Franchised Restaurant and personal property, and business income coverage covering 12 months of actual loss sustained; (e) workers' compensation (as required by statute); (f) employer's liability ($1,000,000/$1,000,000/$1,000,000); (g) employment practices liability ($1,000,000 per occurrence and aggregate limit); (h) cyber insurance ($1,000,000 per occurrence and agg
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkers' 2025 Franchise Disclosure Document, franchisees must maintain umbrella liability insurance coverage of at least $5,000,000 per occurrence and $5,000,000 in aggregate. This umbrella policy must list employer's liability, general liability, and automobile liability as underlying policies.
In practical terms, this means a Checkers franchisee needs to secure a substantial insurance policy to protect against large claims that exceed the limits of their general liability, auto, and employer's liability coverage. The umbrella policy acts as an additional layer of protection, kicking in when the underlying policies are exhausted. This is a fairly standard requirement in the franchise industry, especially for restaurant franchises, given the potential for accidents, injuries, or other incidents that could lead to significant financial losses.
It's important to note that Checkers retains the right to increase the required coverage amounts or require different or additional insurance coverage at any time. This could be due to factors like inflation, the identification of new risks, changes in the law, or higher damage awards. Franchisees should factor in the potential for increased insurance costs over time when evaluating the financial viability of the franchise. Furthermore, all insurance policies must be issued by carriers approved by Checkers with an A.M. Best Rating of not less than A VII.