For how long must business interruption insurance cover income for a Desi District franchise?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
re document as Exhibit D).
- B. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Brand Standards Manual, which includes (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, for full repair and replacement value (subject to a reasonable deductible); (ii) Business interruption insurance covering at least 12 months of income; (iii) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, (iv) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 26–29)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, franchisees are required to maintain business interruption insurance that covers at least 12 months of income. This requirement is part of the broader insurance obligations outlined in the Franchise Agreement and Brand Standards Manual.
Business interruption insurance is designed to protect a business's income stream in the event of unforeseen circumstances that cause a temporary shutdown, such as a fire, natural disaster, or other covered peril. By requiring a minimum of 12 months of income coverage, Desi District aims to ensure that franchisees have sufficient financial protection to weather such disruptions and maintain their operations. This type of insurance coverage helps cover ongoing expenses like rent, utilities, and payroll during the period the business is unable to operate normally.
In addition to business interruption insurance, Desi District franchisees must also secure other types of coverage, including property insurance, commercial general liability insurance, business automobile liability insurance, and workers' compensation coverage. These insurance policies must list Desi District and its affiliates as additional insured parties and include a waiver of subrogation in their favor. Furthermore, the policies must be primary and non-contributing with any insurance held by Desi District, and the insurance provider must provide 30 days' prior written notice of cancellation to Desi District. These requirements are typical in franchising to protect the brand and ensure consistent risk management across all franchise locations.