Must the Devon Creek franchisee pay for insurance coverage?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
your costs for ongoing operation.
In addition to the purchases or leases described above, you must obtain and maintain, at your own expense, the insurance coverage that we periodically require. We may regulate the types, amounts, terms and conditions of insurance coverage required for your Franchised Business and standards for underwriters of policies providing required insurance coverage; our protection and rights under the policies as an additional named insured; required or impermissible insurance contract provisions; assignment of policy rights to us; periodic verification of insurance coverage that must be furnished to us; our right to obtain insurance coverage at your expense if you fail to obtain required coverage; our right to defend claims; and similar matters relating to insured and uninsured claims.
You must obtain the following insurance coverages:
Liability. Comprehensive general liability insurance, including errors and omissions coverage, personal and advertising injury coverage, and in the form of a general liability rider or as a separate policy, in the amount of at least One-Million Dollars ($1,000,000) per occurrence and Two-Million Dollars ($2,000,000) in the aggregate; Coverage must include, but shall not be limited to, liability arising out of bodily injury, property damage, premises, operations, products-completed operations, contractual liability, personal injury, advertising injury, where applicable snow removal, and:
- Business Property
- Business Interruption
- Employer Liability
- Employment Practices
- Automobile- Trucks & Trailers
- Workers Compensation
- Other Insurances- as required by local, state and federal laws; and by the landlord
- Insurance Carrier- Minimum rating of "A" by AM Best
Employment. Worker's compensation coverage in the limits required by state law or if no statutory minimum exist, $500,000 per occurrence in full compliance with the applicable laws, statutes, rules or regulations of the State(s) in which Franchisee is located.
Employer Liability. Employer Liability insurance in the amount of One Million Dollars ($1,000,000) per occurrence per employee.
Employment Practices. Employment Practices insurance in the amount of at least One Hundred Thousand Dollars ($100,000), shall be carried on all of Franchisee's employees, as well as such other insurance as may be required by statute or rule of the state in which the Franchised Business is located and operated.
Business Property.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 21–23)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, franchisees are required to obtain and maintain insurance coverage at their own expense. Devon Creek may regulate the types, amounts, terms, and conditions of this insurance. They also set standards for underwriters, require Devon Creek to be named as an additional insured, and mandate periodic verification of coverage. If a franchisee fails to obtain the required coverage, Devon Creek has the right to obtain it at the franchisee's expense.
The required insurance coverages include comprehensive general liability insurance of at least $1,000,000 per occurrence and $2,000,000 in the aggregate, including coverage for errors and omissions, personal and advertising injury. It also includes worker's compensation coverage in the limits required by state law, or $500,000 per occurrence if no statutory minimum exists. Employer liability insurance is required in the amount of $1,000,000 per occurrence per employee.
Specific types of insurance that must be included are Business Property, Business Interruption (in the amount of at least 12 months loss of income including coverage for the franchisor's royalty fees and co-insurance requirements), Employer Liability, Employment Practices (in the amount of at least $100,000), Automobile-Trucks & Trailers (Commercial Vehicle insurance in the amount of at least a combined single limit for bodily and property damage of at least a One-Million Dollars ($1,000,000), or greater if required by state law), Workers Compensation, and Other Insurances as required by local, state and federal laws; and by the landlord. The insurance carrier should have a minimum rating of "A" by AM Best. Devon Creek may update the required insurance policy from time to time, and franchisees must comply with these updates within 30 days of receiving notice.