Is an Exit franchisee required to include Exit and the Subfranchisor as named insureds on their insurance policies?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
ce, and shall defend, indemnify and hold EXIT and Subfranchisor harmless from any and all claims, liability or expenses, including attorneys' fees, which EXIT or Subfranchisor may incur as a result of the conduct of Franchisee's business.
9.7. Insurance
- (A) Franchisee shall maintain and keep in force, at its expense, such forms of insurance, including, but not limited to, general public liability insurance against claims for personal injury, death, or property damage with a general aggregate limit of not less than $1,000,000, errors and omissions insurance with a general aggregate limit of not less than $1,000,000 with such approved insurance companies as Subfranchisor and EXIT reasonably shall require. Franchisee shall carry such additional amounts and forms of insurance which Subfranchisor shall reasonably deem prudent for a Franchisee to carry, should the circumstances or conditions so merit Franchisee carrying such amount and type of insurance, and provided such insurance is then customarily required and maintained by similar businesses. Franchisee shall cause its insurance agency to send directly to EXIT and Subfranchisor, copies of all such polices which shall include EXIT and Subfranchisor and all of their officers and directors as named insureds and such policies shall not be canceled except on ten (10) days written notice to EXIT and Subfranchisor. Franchisee shall, prior to conducting
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees are required to maintain certain insurance policies and include both Exit and the Subfranchisor as named insureds. This requirement is detailed in Section 9.7(A) of the FDD, which outlines the insurance obligations of the franchisee.
Specifically, the franchisee must ensure that Exit and the Subfranchisor, along with their officers and directors, are listed as named insureds on the insurance policies. Furthermore, the franchisee's insurance agency is obligated to send copies of all insurance policies directly to Exit and the Subfranchisor. These policies must also include a provision that they cannot be canceled without providing ten (10) days' written notice to both Exit and the Subfranchisor.
In addition to being named as insureds, Exit and the Subfranchisor must also be named as additional insureds on the franchisee's insurance policies. This requirement ensures that Exit and the Subfranchisor are protected under the franchisee's insurance coverage, mitigating potential risks and liabilities. Prior to commencing business operations under the Franchise Agreement, the franchisee must provide certificates of insurance to Exit and the Subfranchisor, demonstrating that the required insurance coverage is in full force and effect.