Can City Wide modify the minimum coverage limits for insurance required of franchisees?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
Such policy or policies will be written by an insurance company satisfactory to CITY WIDE in accordance with standards and specifications set forth in the Operating Manual or otherwise in writing, and will include, at a minimum (except as different coverages and policy limits may reasonably be specified for all franchisees from time to time by CITY WIDE in the Operating Manual or otherwise in writing) the following: comprehensive general liability insurance, hired/non-hired auto coverage, general liability umbrella policy, cyber insurance, employee dishonesty/crime policy, errors and omissions insurance, employment practices liability insurance, workers' compensation insurance (as determined by state of Franchised Business location), and business interruption insurance. The insurance afforded by the policy or policies respecting liability will not be limited in any way by reason of any insurance which may
be maintained by CITY WIDE. Within six (6) months after the signing of this Agreement, but in no event later than the date on which Franchisee acquires an interest in the real property on which Franchisee will develop and operate the Franchised Business, Franchisee must furnish CITY WIDE for approval a certificate of insurance showing compliance with the foregoing requirements. Such certificate will state that such policy or policies will not be canceled or altered without at least thirty (30) days prior written notice to CITY WIDE and will reflect proof of payment of premiums. Franchisee will also submit copies of such insurance policies. Maintenance of such insurance and the performance by Franchisee of the obligations under this Section 17.3 will not relieve Franchisee of liability under the indemnity provision set forth in this Agreement. Minimum coverage limits may be published in the Operating Manual and may be modified from time to time, as conditions require, by written notice from CITY WIDE to Franchisee.
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, City Wide can modify the minimum insurance coverage limits required of franchisees. The FDD states that City Wide may reasonably specify different coverages and policy limits for all franchisees from time to time in the Operating Manual or in writing. These modifications can be made as conditions require, through written notice to the franchisee.
City Wide requires franchisees to maintain various insurance policies, including comprehensive general liability insurance, hired/non-hired auto coverage, a general liability umbrella policy, cyber insurance, an employee dishonesty/crime policy, errors and omissions insurance, employment practices liability insurance, workers' compensation insurance, and business interruption insurance. Franchisees must name City Wide as an additional insured on these policies.
This flexibility allows City Wide to adapt insurance requirements based on changing market conditions or specific needs, potentially impacting the franchisee's operational costs. Franchisees must stay informed of any changes to the minimum coverage limits and ensure their policies comply with the latest requirements to avoid being in breach of the franchise agreement. Failure to maintain the required insurance coverage allows City Wide to procure the necessary insurance and charge the franchisee for it, including a reasonable fee for expenses incurred.