Does the insurance requirement in the Churchs Chicken Franchise Agreement constitute advice or a representation by Cajun that only such policies, in such amounts, are necessary or adequate to protect the franchisee from losses?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
- F. No Representations. Franchisee acknowledges that no requirement for insurance contained in this Agreement constitutes advice or a representation by Cajun that only such policies, in such amounts, are necessary or adequate to protect Franchisee from losses in connection with its business under this Agreement. Franchisee further acknowledges that the insurance requirements contained in this Agreement shall not be construed as a limitation of Franchisee's liability to Cajun or any third party arising from Franchisee's development and operation of the Franchised Restaurant. Maintenance of this insurance and the performance by Franchisee of its obligations under this Section shall not relieve Franchisee of liability under the indemnification provisions of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, the insurance requirements outlined in the Franchise Agreement do not constitute advice or a representation by Cajun (Churchs Chicken's parent company) that the specified policies and amounts are sufficient to protect the franchisee from all potential losses. The franchisee acknowledges that it is their responsibility to determine and secure adequate insurance coverage for their business.
This means that while Churchs Chicken sets minimum insurance requirements, franchisees should not rely solely on these requirements as a comprehensive risk management strategy. Franchisees should assess their specific risks and consult with insurance professionals to determine the appropriate level of coverage needed to protect their investment and business operations.
The FDD also clarifies that the insurance requirements do not limit the franchisee's liability to Churchs Chicken or any third party. Furthermore, maintaining the required insurance does not relieve the franchisee of their obligations under the indemnification provisions of the Franchise Agreement. This underscores the importance of franchisees understanding their potential liabilities and ensuring they have adequate insurance coverage to address them.