What is the minimum aggregate limit required for Commercial General Liability insurance for a Desi District franchise?
Desi_District Franchise · 2024 FDDAnswer from 2024 FDD Document
, 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,
Source: Item 22 — CONTRACTS (FDD page 52)
What This Means (2024 FDD)
According to Desi District's 2024 Franchise Disclosure Document, franchisees must maintain Commercial General Liability insurance with specific coverage limits. This insurance must include products liability coverage and broad form commercial liability coverage, written on an "occurrence" policy form. The minimum required coverage is $1,000,000 single limit per occurrence and $2,000,000 aggregate limit.
This requirement ensures that Desi District franchisees have adequate financial protection against potential liabilities arising from accidents, injuries, or damages that may occur on the business premises or result from the products sold. The aggregate limit of $2,000,000 represents the total amount the insurance company will pay out for all claims during the policy period, while the $1,000,000 single limit per occurrence caps the payout for any single incident.
In addition to the coverage limits, Desi District requires that the insurance policies (other than Workers Compensation) list Desi District Franchise Group and its affiliates as an additional insured and include a waiver of subrogation in favor of Desi District Franchise Group and its affiliates. The policy must also be primary and non-contributing with any insurance carried by Desi District Franchise Group or its affiliates, and stipulate that Desi District Franchise Group shall receive 30 days' prior written notice of cancellation. Franchisees must provide Certificates of Insurance evidencing the required coverage to Desi District Franchise Group prior to opening and upon annual renewal of the insurance coverage, as well as at any time upon request of Desi District Franchise Group.
These insurance requirements are typical in franchising to protect both the franchisee and the franchisor from potential financial losses due to unforeseen events. Franchisees should factor in the cost of these insurance policies when evaluating the overall investment required to start and operate a Desi District franchise.