What is the minimum comprehensive automobile 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 comprehensive automobile insurance coverage of $1 million for any vehicle operated on behalf of the franchised business. This is a mandatory insurance requirement that must be in place before the Fly Fitness business opens.
In addition to automobile insurance, Fly Fitness also mandates other insurance coverages, including commercial general liability insurance (with coverage for professional liability and sexual abuse), worker's compensation, business interruption insurance, and property insurance. All policies must be written by carriers acceptable to Fly Fitness and must name Fly Fitness and its affiliates as additional insured parties.
The franchisor retains the right to modify insurance requirements, potentially adding further types of coverage or increasing coverage amounts in the future. Franchisees must comply with these changes to remain in compliance with the Franchise Agreement. Failing to maintain the required insurance coverage could result in a default under the Franchise Agreement.
This level of required insurance coverage is fairly standard in the franchise industry, particularly for businesses that involve physical activity or potential liability. Prospective Fly Fitness franchisees should factor the cost of these insurance policies into their initial and ongoing operating expenses.