Under the Chicken Guy franchise agreement, what is prohibited regarding insurance policy provisions that limit coverage for Chicken Guy or its affiliates?

According to Chicken Guy's 2025 Franchise Disclosure Document, the franchise agreement stipulates specific requirements regarding the franchisee's insurance policies. One key provision is that no insurance policy obtained by the franchisee can include language that limits or reduces coverage for the franchisor, Chicken Guy, or its affiliates in the event of a claim. This requirement is designed to protect Chicken Guy from potential liabilities arising from the franchisee's operations.

In practical terms, this means a prospective Chicken Guy franchisee must carefully review the terms of their insurance policies to ensure compliance. They need to confirm that the policy does not contain any clauses that would diminish the coverage available to Chicken Guy should a claim be made against the franchisee. This may require working closely with their insurance provider to obtain the appropriate endorsements or policy language.

Furthermore, the Chicken Guy franchise agreement specifies other general insurance requirements. Each policy must be endorsed to provide primary coverage, meaning the franchisee's insurance must pay out before any insurance carried by Chicken Guy. The franchisee's policy limits must be exhausted before Chicken Guy can claim benefits under any other insurance. The franchisee is also obligated to indemnify Chicken Guy for any payments made under Chicken Guy's insurance policies before the franchisee's coverage limits are exhausted. The franchisee must also ensure that their insurance company has an "A+" rating or better from Best's Insurance Rating Service and that deductibles do not exceed $5,000 unless Chicken Guy provides written approval.

These insurance requirements are typical in franchising, as franchisors seek to protect their brand and business from liabilities arising from franchisee operations. Franchisees should carefully consider these requirements and factor in the cost of obtaining appropriate insurance coverage when evaluating the Chicken Guy franchise opportunity.