How does the requirement for Craters & Freighters franchisees to purchase insurance from a designated supplier (Item 8) relate to the restrictions on sources of products and services?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
You must establish and operate your Franchised Business in compliance with your Franchise Agreement and the standards and specifications contained in our Operations Manuals.
We have standards and specifications for your insurance policies, and you must purchase certain insurance policies from our designated insurance supplier. You are required to have insurance covering the operations of your Franchised Business, in such amounts and on such terms, as prescribed by the Operations Manuals. As of the date of this Franchise Disclosure Document, this insurance will be a combination of, and not limited to:
- Commercial general liability coverage which includes bodily injury, property damage, personal injury, and broad form contractual liability, with the following limits:
- o General aggregate: $2,000,000 o Each occurrence: $1,000,000
- o Products-completed operations aggregate: $2,000,000
o Personal and advertising injury: $1,000,000
o Fire legal liability: $100,000
o Blanket contractual liability: $1,000,000
- Umbrella coverage with a minimum limit of $1,000,000 per occurrence, at least as broad as the required underlying coverage.
- Automobile liability with a minimum limit of $1,000,000 comprehensive per occurrence on all hired, owned, and non-owned vehicles.
- Workers compensation coverage which complies with state law and with the following limits:
o Each accident: $1,000,000
o Disease – each employee: $1,000,000 o Disease – policy limit: $1,000,000
The policies and amounts provided above are our minimum insurance requirements. We strongly recommend that you work with a licensed insurance agent or broker to identify and obtain additional insurance coverage for your Franchised Business including, but not limited to, warehouse storage and cyber insurance coverage.
What This Means (2025 FDD)
According to Craters & Freighters's 2025 Franchise Disclosure Document, franchisees must adhere to specific standards and specifications outlined in the Franchise Agreement and Operations Manuals. This includes purchasing certain insurance policies from a designated insurance supplier.
The required insurance coverage includes commercial general liability coverage with limits such as a $2,000,000 general aggregate and $1,000,000 per occurrence, products-completed operations aggregate of $2,000,000, personal and advertising injury coverage of $1,000,000, fire legal liability of $100,000, and blanket contractual liability of $1,000,000. Additionally, franchisees need umbrella coverage with a minimum limit of $1,000,000 per occurrence, automobile liability with a $1,000,000 comprehensive limit per occurrence, and workers compensation coverage meeting state law requirements with limits of $1,000,000 for each accident and disease.
Craters & Freighters also recommends that franchisees work with a licensed insurance agent or broker to obtain additional insurance coverage, such as warehouse storage and cyber insurance. This requirement to purchase insurance from a designated supplier is part of Craters & Freighters's broader system to maintain standards and quality, as it ensures that all franchisees have adequate and uniform insurance coverage. This is directly related to the restrictions on sources of products and services, as Craters & Freighters mandates specific suppliers to ensure compliance with their operational standards.
If a franchisee wishes to use alternative suppliers other than those approved by Craters & Freighters, they must submit a written request. Craters & Freighters will review the request based on criteria such as the supplier's ability to provide sufficient quantity, quality of products and services at competitive prices, production and delivery capability, and dependability. Craters & Freighters retains the right to revoke approval of an alternative supplier if complaints arise from franchisees, customers, or other sources. This system allows Craters & Freighters to maintain quality control while providing some flexibility for franchisees to propose alternative suppliers, although insurance purchases are explicitly mandated from a designated supplier.