What two components determine the amount of the Insurance Payment 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 Insurance Payment is determined by two components: packers legal liability insurance and cargo insurance. The monthly fee for packers legal liability insurance currently ranges from $125 to $500, and is tied to the revenue generated by the franchise. This fee is based on an annual audit by the insurance company, which determines the amount of exposure and liability related to the business activities in the prior year compared to other franchisees.
The monthly fee for cargo insurance is variable and calculated monthly. This calculation is based on the volume of cargo insured, the declared value of the cargo according to current cargo insurance rates, and the previous year's loss-ratio of the franchise within the cargo insurance program.
The FDD indicates that the amount of the Insurance Payment could increase based on insurance rates and the business activities of the franchise. This payment is made monthly, at the same time and in the same manner as the Royalty Fee, and covers insurance secured by Craters & Freighters on behalf of the franchisee as part of a system-wide program. Craters & Freighters also reserves the right to require franchisees to secure more insurance policies through this program in the future.