What is the minimum amount of Commercial General Liability insurance coverage required for a Chocolate Bash franchise?
Chocolate_Bash Franchise · 2024 FDDAnswer from 2024 FDD Document
usiness, for full repair and replacement value (subject to a reasonable deductible);
- (ii) Business interruption insurance covering at least 12 months of income;
- (iii) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit; and
- (iv) Workers Compensation coverage as required by state law.
- (b) Franchisee's policies (other than Workers Compensation) must (1) list CB Franchising and its affiliates as an additional insured, (2) include a waiver of subrogation in favor of CB Franchising and its affiliates, (3) be primary and non-contributing with any insurance carried by CB Franchising or its affiliates, and (4) stipulate that CB Franchising shall receive 30 days' prior written notice of cancellation.
- (c) Franchisee shall provide Certifi
Source: Item 22 — CONTRACTS (FDD pages 38–39)
What This Means (2024 FDD)
According to Chocolate Bash's 2024 Franchise Disclosure Document, franchisees must maintain Commercial General Liability insurance with specific coverage limits. This insurance must include products liability coverage and broad form commercial liability coverage, written on an "occurrence" policy form. The minimum required coverage is $1,000,000 single limit per occurrence and $2,000,000 aggregate limit.
This requirement ensures that Chocolate Bash franchisees have adequate financial protection against potential liabilities arising from their business operations, such as customer injuries or property damage. The inclusion of products liability coverage is particularly important for a food-service franchise like Chocolate Bash, as it covers liabilities related to the products sold. The "occurrence" policy form means that the policy will cover incidents that occur during the policy period, regardless of when a claim is filed.
In addition to the coverage amounts, Chocolate Bash requires that the insurance policies (other than Workers Compensation) list Chocolate Bash and its affiliates as an additional insured and include a waiver of subrogation in favor of Chocolate Bash and its affiliates. The franchisee's policy must be primary and non-contributing with any insurance carried by Chocolate Bash or its affiliates. Furthermore, Chocolate Bash must receive 30 days' prior written notice of cancellation. Franchisees must provide Certificates of Insurance evidencing the required coverage to Chocolate Bash prior to opening, upon annual renewal of the insurance coverage, and at any time upon request of Chocolate Bash.
These insurance requirements are typical in franchising, as they protect both the franchisee and the franchisor from potential financial losses due to unforeseen events. Franchisees should factor in the cost of these insurance policies when evaluating the overall investment required to start and operate a Chocolate Bash franchise. It is also advisable to consult with an insurance professional to ensure that the coverage obtained meets all of Chocolate Bash's requirements and adequately protects the franchisee's business.