Is the monthly fee for cargo insurance for Craters & Freighters fixed or variable?
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' 2025 Franchise Disclosure Document, the monthly fee for cargo insurance is variable. It is calculated monthly based on three factors: the volume of cargo insured by the franchisee's business, the declared value of that cargo based on current insurance rates, and the previous year's loss-ratio of the franchisee's business 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 fees will likely be higher. Conversely, a franchisee with a low loss-ratio (few claims) may see lower insurance costs.
In addition to the cargo insurance fee, franchisees also pay a monthly fee for packers legal liability insurance, which currently ranges from $125 to $500. This fee is tied to the revenue generated by the franchised business and is based on an annual audit by the insurance company. The total Insurance Payment, which includes both cargo insurance and packers legal liability insurance, is payable monthly along with the royalty fee. Craters & Freighters retains the right to require franchisees to secure more insurance policies through the system-wide program in the future, which could further impact costs.
Prospective franchisees should carefully consider how their anticipated shipping volume, cargo values, and potential loss-ratio could affect their monthly insurance payments. Understanding these factors is crucial for accurate financial planning and assessing the overall profitability of a Craters & Freighters franchise.