Are franchisees required to maintain insurance coverage before opening their Cilantro Taco Grill business?

t have any franchisees.

Before you open for business, you must purchase and maintain at your sole cost and expense the insurance coverage that we specify. The minimum insurance required is comprehensive general liability insurance, in the amount of at least $2,000,000 per occurrence, including broad form contractual liability, employment practices coverage, broad form property damage, personal injury, facilities, completed operations, products liability, automobile (covering all vehicles used in the delivery of catering and products from the Franchised Business, including owned, hired and non-owned vehicles), and fire legal liability (however, in the event Franchisee offers alcoholic beverages from the Franchised Business, it shall include liquor liability, and the amount of comprehensive general liability will increase to $5,000,000); property and casualty insurance to cover the full

replacement value of your leasehold improvements, equipment, furniture, fixtures, and inventory; business interruption insurance of at least 50% of your annual Gross Revenue excluding payroll; statutory worker's compensation insurance in the limits required by state law; comprehensive automobile liability insurance in the amount of at least a combined single limit for bodily injury and property damage of $1,000,000; coverage for damage or loss of electronic and computer equipment, media and data in an amount of not less than $10,000; and coverage for identity forgery, alteration or theft in an amount of at least $2,500 per loss and $2,500 for expenses. We reserve the right to require additional types of insurance and coverage as provided in the Franchise Agreement.

In addition, related to any construction, renovation, refurbishment or remodeling of the Franchised Business, you must maintain builders' risks insurance and performance and completion bonds in forms and amounts, and written by duly licensed carrier or carriers, satisfactory to us. All policies, including general liability and property damage policies, must name us and those of our affiliates that we specify, and the respective officers, directors, shareholders, partners, agents, representatives, independent contractors, servants and employees of each of them, as additional named insureds and must include a waiver of subrogation in favor of all those parties.

We provide no material benefits (such as the grant of additional franchises) based on your use of designated sources; however, failure to use approved items or designated suppliers and contractors may be a default under the Franchise Agreement.

Source: Item 10 — Initial Inventory. This estimate is for the cost of the initial inventory sufficient for approximately 3 months of operation. Your initial inventory will include ingredients and supplies, containers, cleaning products, and other disposables. (FDD pages 21–22)