How much written notice is required to cancel an insurance policy held by an Exit franchisee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
vice, 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, an Exit franchisee's insurance policies cannot be canceled without providing ten days' written notice to both Exit and the subfranchisor. This requirement is in place to ensure that Exit and the subfranchisor are aware of any potential lapse in coverage, as they are named as additional insureds on the franchisee's policies. This allows them time to ensure continuous coverage to protect their interests.
The insurance policies that Exit franchisees are required to maintain include general public liability insurance and errors and omissions insurance, each with a general aggregate limit of not less than $1,000,000. The franchisor and subfranchisor can also reasonably require additional amounts and forms of insurance if circumstances merit, provided such insurance is customarily required and maintained by similar businesses.
This requirement ensures that Exit and the subfranchisor are promptly informed of any changes to the franchisee's insurance coverage, allowing them to take necessary steps to protect their interests. For a prospective franchisee, this means ensuring that their insurance agency is aware of this notification requirement and can comply with it. Failure to maintain the required insurance and provide adequate notice of cancellation could result in a breach of the franchise agreement.