When does the Churchs Chicken Sublessee's obligation for insurance policies begin?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
Sublessee's obligations for all such insurance policies shall be applicable from and after the Commencement Date; it being expressly provided that Sublessee shall not be responsible for any insurance during the time from the Effective Date of this Sublease up until the Commencement Date, i.e., during the construction phase of the improvements to the Premises being made directly by Sublessor.
Sublessor shall either obtain or shall cause its own general contractor to obtain and maintain all insurance during the construction phase, including, without limitation, general liability, builder's risk, including insurance against damage, loss or theft of materials delivered to the construction site and not yet installed in the Premises and also furniture, fixtures and equipment that may from time to time be delivered to the construction site and received by Sublessor (or its contractor), whether or not permanently installed, together with business interruption insurance to the extent available in the state in which the Premises are located.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, a Sublessee's obligation to maintain insurance coverage begins on the Commencement Date. The Sublessee is not responsible for insurance costs from the Effective Date of the sublease up to the Commencement Date, which typically covers the construction phase of improvements to the premises made by the Sublessor.
During the construction phase, the Sublessor is responsible for obtaining and maintaining insurance. This includes general liability, builder's risk insurance (covering damage, loss, or theft of materials), and business interruption insurance, if available in the state where the premises are located.
It is important for a prospective Churchs Chicken franchisee to understand the distinction between the Effective Date and the Commencement Date in the sublease agreement, as this determines when their insurance obligations begin. Franchisees should also confirm that the Sublessor has adequate insurance coverage during any construction or improvement phases to protect against potential losses or liabilities.