Can Checkersrallys increase the required amounts of insurance coverage for a Checkersrallys franchise during the term of the Franchise Agreement?
Checkersrallys Franchise · 2025 FDDAnswer from 2025 FDD Document
All insurance policies must: (1) be issued by carriers we approve 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 from time to time; (3) name us and our affiliates as additional insured; (4) provide for 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. The minimum amount of liability coverage we prescribe in no way limits your liability to those 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.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 39–44)
What This Means (2025 FDD)
According to Checkersrallys's 2025 Franchise Disclosure Document, Checkersrallys has the right to increase the required amounts of insurance coverage during the franchise term. Checkersrallys can also require different or additional insurance coverage. These changes can be made to reflect inflation, the identification of new risks, changes in law or standards of liability, higher damage awards, or other relevant changes in circumstances.
The franchisee is responsible for maintaining several categories of insurance coverage with minimum liability coverage amounts. These include general liability ($1,000,000 per occurrence and $2,000,000 aggregate), automobile ($1,000,000 combined single limit), umbrella liability ($5,000,000 per occurrence and aggregate), property (100% of full replacement cost), workers' compensation (as required by statute), employer's liability ($1,000,000/$1,000,000/$1,000,000), employment practices liability ($1,000,000 per occurrence and aggregate limit), and cyber insurance ($1,000,000 per occurrence and aggregate limit).
All insurance policies must be issued by carriers Checkersrallys approves 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 Checkersrallys prescribes from time to time. Checkersrallys and its affiliates must be named as additional insured, and the policies must provide for 30 days' prior written notice of any material modification, cancellation, or expiration. A waiver of subrogation in favor of Checkersrallys and its affiliates is also required, along with any other provisions Checkersrallys may require. The minimum coverage amounts prescribed do not limit the franchisee's liability.
This ability for Checkersrallys to modify insurance requirements is relatively common in franchising, as it allows the franchisor to adapt to changing legal and economic conditions. However, it also introduces a degree of uncertainty for the franchisee, who may face increased insurance costs during the term of the agreement. Prospective franchisees should factor in potential insurance increases when evaluating the financial feasibility of the franchise.