How is the monthly fee for cargo insurance calculated for a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Insurance Payment | Two components determine the amount of the required Insurance Payment: (1) packers legal liability insurance and (2) cargo insurance. The monthly fee for packers legal liability insurance currently ranges from $125 to $500 and is tied to the revenue generated by your Franchised Business. Based on an annual audit performed by the insurance company, a determination is made about the amount of exposure and liability relating to your business activities in the prior year in comparison to our other franchisees. The monthly fee for cargo insurance is variable and calculated monthly based on the volume of cargo insured by your Franchised Business, the declared value of such cargo (in accordance with your then-current cargo insurance rates), and the previous year's loss-ratio of your Franchised Business in the cargo insurance program. The amount of the Insurance Payment could increase based on insurance rates and the business activities of your Franchised Business. | Payable to us on a monthly basis at the same time and in the same manner as the Royalty Fee. | The Insurance Payment relates to insurance secured by us on your behalf as part of a system wide program. As of the issuance date of this Franchise Disclosure Document, the Insurance Payment covers costs associated with packers legal liability insurance and cargo insurance. We reserve the right to require you to secure more insurance policies through this program in the future. |
Source: Item 6 — OTHER FEES (FDD pages 12–16)
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, the monthly fee for cargo insurance is variable and depends on several factors. It is calculated monthly based on the volume of cargo insured by the franchisee's business, the declared value of that cargo according to current insurance rates, and the previous year's loss-ratio of the franchise within the cargo insurance program.
This means that a Craters & Freighters franchisee's cargo insurance costs can fluctuate from month to month depending on their business activity and claims history. If a franchisee ships a high volume of valuable cargo, their insurance costs will likely be higher. Similarly, a poor loss-ratio (meaning a high number of claims) in the previous year will also lead to increased insurance fees.
The FDD also indicates that the amount of the insurance payment could increase based on insurance rates and the business activities of the franchisee. This implies that Craters & Freighters franchisees should be aware that their insurance costs are not fixed and can change over time due to factors both within and outside of their control.
In addition to cargo insurance, Craters & Freighters franchisees are also required to maintain packers legal liability insurance, with monthly fees ranging from $125 to $500, tied to the revenue generated by their franchised business. Both insurance types are secured by Craters & Freighters on behalf of the franchisee as part of a system-wide program.