What is the minimum amount of business interruption insurance required for a Cilantro Taco Grill franchise?
Cilantro_Taco_Grill Franchise · 2024 FDDAnswer from 2024 FDD Document
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
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Cilantro Taco Grill's 2024 Franchise Disclosure Document, franchisees must secure business interruption insurance. This insurance must cover at least 50% of the franchisee's annual Gross Revenue, excluding payroll.
This requirement ensures that Cilantro Taco Grill franchisees have a financial safety net in case their business operations are disrupted due to unforeseen circumstances such as natural disasters, property damage, or other events that could temporarily halt business. The insurance coverage helps to mitigate potential losses during the interruption period.
For a prospective Cilantro Taco Grill franchisee, this means factoring in the cost of business interruption insurance when projecting operating expenses. The premium will depend on the estimated annual gross revenue, the specific risks associated with the location, and the insurance provider's rates. It is important to note that the 50% coverage is a minimum, and franchisees may want to consider higher coverage based on their individual circumstances and risk tolerance.
It is also important to note that this is just one of several insurance requirements. Franchisees must also obtain comprehensive general liability insurance, property and casualty insurance, worker's compensation insurance, and other specific coverages, all of which contribute to the overall cost of operating a Cilantro Taco Grill franchise.