Is payment of benefits under a disability insurance policy required to establish Permanent Disability for an Exit franchisee?

According to Exit's 2025 Franchise Disclosure Document, while the payment of benefits under a disability insurance policy can serve as conclusive evidence of Permanent Disability, it is not a mandatory requirement to establish Permanent Disability for an Exit franchisee. The determination of Permanent Disability is based on whether a mental or physical disability prevents the individual from performing the essential duties of their employment, as reasonably determined by the Subfranchisor.

This means that an Exit franchisee can be considered Permanently Disabled even without receiving disability insurance benefits, provided that the Subfranchisor determines that the franchisee's condition meets the defined criteria. This determination is based on the Subfranchisor's assessment of the franchisee's ability to perform their job duties due to the disability.

For a prospective Exit franchisee, this clause offers some flexibility. If a franchisee does not have disability insurance or their claim is denied, they may still be able to establish Permanent Disability through the Subfranchisor's assessment. However, the ultimate decision rests with the Subfranchisor, which introduces a degree of subjectivity. It is important for potential franchisees to understand the criteria and process the Subfranchisor uses to determine Permanent Disability.

This approach is not uncommon in franchising, where franchisors often retain the right to make key determinations about a franchisee's ability to operate the business. However, the lack of a strict requirement for disability insurance benefits provides some leeway for franchisees who may not have such coverage or whose claims are disputed.