Can Devon Creek regulate the terms and conditions of the insurance coverage required for a Franchised Business?
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. Business Property insurance should be in the amount of a least replacement cost.
Business Interruption. Business Interruption insurance should be in the amount of at least Twelve (12) months loss of income including coverage for the franchisor's royalty fees and co-insurance requirements.
Automobile. 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. Coverage shall include all owned, non-owned, and hired autos. If allowable by law, waiver of subrogation in favor of all parties required in Contract Documents.
Other Insurances. Any other insurances should be carrier as required by local, state and federal laws; and by the landlord.
Insurance Carrier. The carrier should have a Minimum rating of "A-" by AM Best.
We may update our required insurance policy from time to time. Franchisee shall be required to comply with Devon Creek updated insurance policy within thirty (30) days of receiving notice.
Currently, there are no purchasing or distribution cooperatives. However, we can require that you make your purchases through a cooperative if one is formed.
Although we do not do so currently, we may in the future negotiate purchase arrangements, including price terms, with designated and approved suppliers on behalf of all franchisees.
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, Devon Creek has the authority to regulate various aspects of the insurance coverage that franchisees are required to maintain. This includes the types of coverage, the amounts, and the specific terms and conditions of the insurance policies. Devon Creek can also set standards for the underwriters providing the insurance.
Devon Creek can require that it be named as an additional insured under the policies, dictate required or prohibited provisions in the insurance contracts, and demand assignment of policy rights. Franchisees must also furnish periodic verification of their insurance coverage to Devon Creek. If a franchisee fails to obtain the required insurance, Devon Creek has the right to obtain coverage on the franchisee's behalf, at the franchisee's expense. Devon Creek also retains the right to defend claims and manage matters related to both insured and uninsured claims.
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 various liabilities. Worker's compensation coverage is required in the limits mandated 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. Additional insurance includes Employment Practices insurance in the amount of at least $100,000, Business Property insurance in the amount of at least replacement cost, Business Interruption insurance in the amount of at least twelve (12) months loss of income including coverage for the franchisor's royalty fees and co-insurance requirements, and 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. The insurance carrier must have a minimum rating of "A" by AM Best or "A-" by AM Best. Devon Creek may update its required insurance policy from time to time, and franchisees must comply with these updates within thirty (30) days of receiving notice.