What is the minimum business interruption insurance coverage a Fly Fitness franchisee must maintain?
Fly_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
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Before you open for business, you must purchase and maintain the minimum insurance coverage that we specify. This includes commercial general liability insurance, including coverage for professional liability and sexual abuse of at least $1 million per occurrence and $3 million aggregate; worker's compensation coverage in the limits required by the state in which the Franchised Business is located; business interruption insurance; property insurance for the full replacement value of furniture, fixtures, equipment, vehicles, inventory, and leasehold improvements or $50,000, whichever is greater; and comprehensive automobile insurance of $1 million for any vehicle operated on behalf of the Franchised Business. Each policy must be written by a responsible carrier or carriers acceptable to us and must name us and our respective officers, directors, partners, agents, and employees as additional insured parties, as their interests may appear. We reserve the right to require additional types of insurance and coverage as prov
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 18–20)
What This Means (2024 FDD)
According to Fly Fitness's 2024 Franchise Disclosure Document, franchisees are required to maintain business interruption insurance. The document does not specify a minimum coverage amount for this insurance type.
However, Fly Fitness does mandate other insurance coverages. These include commercial general liability insurance with $1 million per occurrence and $3 million aggregate coverage for professional liability and sexual abuse. Franchisees must also carry worker's compensation coverage as required by the state where the franchise is located. Property insurance is required for the full replacement value of furniture, fixtures, equipment, vehicles, inventory, and leasehold improvements, or $50,000, whichever is greater. Additionally, comprehensive automobile insurance of $1 million is required for any vehicle operated on behalf of the Fly Fitness business.
All insurance policies must be written by carriers acceptable to Fly Fitness and must name Fly Fitness and its officers, directors, partners, agents, and employees as additional insured parties. Fly Fitness retains the right to require additional types of insurance and coverage as specified in the Franchise Agreement. Prospective franchisees should clarify the required level of business interruption insurance with Fly Fitness to ensure they meet all obligations.
While the FDD specifies minimum coverage amounts for several types of insurance, the lack of a specific amount for business interruption insurance means franchisees need to engage in due diligence to determine appropriate coverage levels. This may involve consulting with insurance professionals to assess potential risks and business needs to ensure adequate protection against income loss due to unforeseen events.