Are Chocolate Fish Coffee franchisees required to carry Workers Compensation coverage?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
cific Obligations
The following are our current specific obligations for purchases and leases:
- A. Real Estate. Your business location is subject to our approval and must meet our specifications. You must use reasonable efforts to have your landlord sign our form of Rider to Lease Agreement (attached to this disclosure document as Exhibit D).
- B. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Brand Standards Manual, which includes (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, 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, (iv) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000, and (v) Workers Compensation coverage as required by state law.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 16–18)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, franchisees are required to obtain Workers Compensation coverage. The specific requirements for this coverage are dictated by state law.
In addition to Workers Compensation, Chocolate Fish Coffee franchisees must also secure other types of insurance. These include (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, 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, (iv) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000.
Chocolate Fish Coffee requires that all insurance policies (excluding Workers Compensation) list the franchisor and its affiliates as additional insured parties. These policies must also include a waiver of subrogation in favor of Chocolate Fish Coffee and its affiliates. Furthermore, the franchisee's insurance must be primary and non-contributing with any insurance held by Chocolate Fish Coffee or its affiliates. Finally, Chocolate Fish Coffee must receive 30 days' prior written notice of any policy cancellation.
It is common practice in franchising to require franchisees to maintain various insurance coverages to protect both the franchisee's business and the franchisor's brand. Franchisees should carefully review the specific insurance requirements outlined in the Franchise Agreement and Brand Standards Manual to ensure compliance and adequate protection.