What insurance policies must a Chicken Guy franchisee maintain at a minimum?
Chicken_Guy Franchise · 2025 FDDAnswer from 2025 FDD Document
ruments and documents, render such other assistance and do any acts and things as may, in the opinion of Chicken Guy's counsel, be necessary or advisable to protect and maintain Chicken Guy's interests in the Proprietary Marks, including, without limitation, Chicken Guy's interests in litigation or proceedings before the U.S. Patent and Trademark Office or other tribunal relating to the Proprietary Marks.
16. INSURANCE
A. Procurement of Insurance by Franchisee. Franchisee shall be responsible for all loss or damage arising from or related to Franchisee's development and operation of the Franchised Restaurant, and for all demands or claims with respect to any loss, liability, personal injury, death, property damage, or expense whatsoever occurring upon the premises of, or in connection with the development or operation of, the Franchised Restaurant. Franchisee shall maintain in full force and effect throughout the term of this Agreement that insurance which Franchisee determines is necessary or appropriate for liabilities caused by or occurring in connection with the development or operation of the Franchised Restaurant which shall include, at a minimum, insurance policies of the kinds, and in the amounts, required by Section 16.B. Chicken Guy, and any entity with an insurable interest designated by Chicken Guy, shall be an additional insured in all liability policies (except workers compensation) to the extent each has an insurable interest.
- B. Minimum Insurance Requirements. All insurance policies shall be written by an insurance company or companies satisfactory to Chicken Guy, in compliance with the standards, specifications, coverages and limits set forth in the Manual or otherwise provided to Franchisee in writing. Chicken Guy may reasonably increase the minimum required coverage and require different or additional kinds of insurance to reflect inflation, changes in standards of liability, higher damage awards or other relevant changes in circumstances. Franchisee shall receive written notice of such modifications and shall take prompt action to secure the additional coverage or higher policy limits. These policies shall include, at a minimum, the following:
- (1) Comprehensive or Commercial General Liability Insurance, including coverage for bodily injury, personal injury, products liability, contractual liability, broad form property damage, nonowned automobiles, and completed operations on an occurrence basis with policy limits of not less than $1,000,000 per occurrence and $2,000,000 in the aggregate.
- (2) All Risks Property Insurance for fire and related peril (including floods and earthquakes where applicable) with limits of insurance of not less than the full replacement value of the Franchised Restaurant, and its furniture, fixtures, equipment, inventory and other tangible property.
- (3) Business Interruption and Extra Expense Insurance, including rental payment continuation for a minimum of 12 months, loss of profits and other extra expenses experienced during the recovery from property loss.
- (4) Plate Glass Insurance for replacement of glass from breakage.
- (5) Employer's Liability Insurance in the amount of $500,000 per person, $500,000 in the aggregate and $500,000 for occupational disease.
- (6) Liquor Liability Insurance for bodily injury and property damage on an occurrence basis with policy limits of not less than $1,000,000, to the extent that Chicken Guy has approved the sale of alcoholic beverages at the Franchised Restaurant.
- (7) Workers' Compensation and such other insurance as may be required by statute or rule of the state or locality in which the Franchised Restaurant is located. This coverage shall also be in effect for all of Franchisee's employees who participate in any of the training programs described in Section 12.
- (8) Builder's All Risk Insurance in connection with any new construction or substantial renovation, refurbishment or remodeling of the Franchised Restaurant. Franchisee shall also maintain performance and completion bonds in forms and amounts, and written by carrier(s), reasonably satisfactory to Chicken Guy.
- (9) Automobile Liability if Franchisee is engaged in any delivery operations. Coverage shall be on a Symbol 1 (any auto) basis and in the amount of $1,000,000 per occurrence on any auto.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2025 FDD)
According to Chicken Guy's 2025 Franchise Disclosure Document, franchisees must maintain specific insurance policies throughout the term of their agreement. These policies are intended to cover liabilities arising from the development and operation of the franchised restaurant. Chicken Guy also needs to be listed as an additional insured in all liability policies, except for workers' compensation, to the extent that Chicken Guy has an insurable interest.
The minimum insurance requirements include Comprehensive or Commercial General Liability Insurance with $1,000,000 per occurrence and $2,000,000 in the aggregate, All Risks Property Insurance for the full replacement value of the restaurant, Business Interruption and Extra Expense Insurance for at least 12 months, Plate Glass Insurance, and Employer's Liability Insurance at $500,000 per person, $500,000 in the aggregate, and $500,000 for occupational disease. If the sale of alcohol is approved, Liquor Liability Insurance with $1,000,000 in policy limits is required. Franchisees must also have Workers' Compensation and any other insurance mandated by state or local laws.
Additional insurance requirements include Builder's All Risk Insurance for new construction or significant renovations, and Automobile Liability Insurance with $1,000,000 per occurrence if the franchisee engages in delivery operations. Cyber Liability Insurance with a $1,000,000 minimum limit is also required, covering business interruption loss, cyber extortion, data recovery costs, and data and network liability. Lastly, franchisees need Umbrella or Excess Liability Insurance of $3,000,000 per occurrence and $3,000,000 in annual aggregate, following the form of general liability, liquor liability, automobile liability, and employer's liability.
Chicken Guy has the right to increase the minimum required coverage amounts or require different or additional kinds of insurance to reflect inflation, changes in liability standards, higher damage awards, or other relevant changes. The franchisee will receive written notice of these changes and must promptly obtain the additional coverage or higher policy limits. All insurance policies must be written by a company with an "A+" or better rating from Best's Insurance Rating Service, and deductibles generally cannot exceed $5,000 without written approval from Chicken Guy.