What is the minimum amount of the umbrella policy that a Flowerama franchisee must maintain?
Flowerama Franchise · 2024 FDDAnswer from 2024 FDD Document
l not be inconsistent with our image or damage our goodwill); (4) financial stability; and (5) the negotiation of a mutually satisfactory license to protect our intellectual property. Our intention in approving any item or supplier is to ensure brand consistency.
You shall maintain with responsible companies approved by us, and qualified to do business in the state where the Center is located, auto liability insurance for hired and non-owned vehicles and scheduled vehicles (if owned) for a combined single limit of $1,000,000, public liability insurance insuring us and our agents against all claims, demands, or actions for injury or death of any one person in an amount of not less than $1,000,000, and for injury to or death of more than one person in any one accident in an amount of not less than $2,000,000, and for damage to property in an amount not less than $500,000 made for or on behalf of any person, firm or corporation, arising from, related to, or connected with the conduct or operation of your Center and in addition, and in like amounts, covering your contractual liability under the hold harmless clause in the Franchise Agreement. We shall be listed in addition to you as a named insured on all insurance policies. You shall also maintain workers' compensation insurance with companies and in amounts as are required by the state in which the Center is operated. You shall furnish us with evidence satisfactory to us that you have obtained the required insurance coverages. You shall provide us with a valid certificate of insurance on each policy required in the Franchise Agreement
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 29–32)
What This Means (2024 FDD)
According to Flowerama's 2024 Franchise Disclosure Document, franchisees are required to maintain an umbrella policy with a minimum coverage of $2,000,000. This policy is in addition to other required insurance coverages, such as auto liability, public liability, and worker's compensation insurance. Flowerama must be listed as a named insured on all insurance policies.
Maintaining adequate insurance coverage is a standard requirement in franchising to protect both the franchisee and the franchisor from potential liabilities. The umbrella policy provides an extra layer of protection beyond the limits of the other required policies. This coverage can be crucial in the event of a significant claim or lawsuit arising from the operation of the Flowerama Center.
Flowerama franchisees must provide evidence of their insurance coverage to Flowerama within 10 days after obtaining the insurance, and no later than the date their shop opens. The franchisee is also responsible for ensuring that the insurance policies cannot be modified, canceled, or terminated without providing Flowerama with 30 days' prior written notice. Flowerama also retains the right to modify the insurance requirements, and franchisees must comply with any changes.
Failure to obtain the required insurance coverage allows Flowerama to purchase insurance on the franchisee's behalf, with the franchisee responsible for reimbursing Flowerama for these costs. Therefore, it is essential for prospective Flowerama franchisees to factor in the cost of these insurance policies, including the $2,000,000 umbrella policy, when evaluating the financial feasibility of the franchise.