What is the minimum amount of umbrella liability insurance coverage required per occurrence and aggregate for a Checkersrallys franchise?
Checkersrallys 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 Checkersrallys's 2025 Franchise Disclosure Document, franchisees are required to maintain umbrella liability insurance coverage of at least $5,000,000 per occurrence and $5,000,000 in aggregate. This insurance must list employer's liability, general liability, and automobile liability as underlying policies.
This requirement means that a Checkersrallys franchisee must secure an umbrella insurance policy that provides a high level of financial protection in the event of a major claim or lawsuit. The umbrella policy acts as an additional layer of coverage above the franchisee's other liability policies, such as general liability and automobile liability. The purpose of this insurance is to protect both the franchisee and Checkersrallys from potentially catastrophic financial losses resulting from incidents occurring at the franchise location.
The FDD also stipulates that all insurance policies must be issued by carriers approved by Checkersrallys with an A.M. Best Rating of not less than A VII. The policies must name Checkersrallys and its affiliates as additional insured, provide 30 days' prior written notice of any material modification, cancellation, or expiration, and include a waiver of subrogation in favor of Checkersrallys and its affiliates. Checkersrallys retains the right to increase the required coverage amounts or require different or additional insurance coverage at any time to reflect inflation, new risks, changes in law, or other relevant changes.
It is important for prospective Checkersrallys franchisees to understand these insurance requirements and factor the cost of obtaining and maintaining the necessary coverage into their overall business plan. Failing to maintain the required insurance coverage could result in a breach of the Franchise Agreement and potential termination of the franchise.