What is the minimum coverage for professional liability under the commercial general liability insurance for a Fly Fitness franchise?
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 must maintain commercial general liability insurance that includes professional liability and sexual abuse coverage. The minimum coverage required is $1 million per occurrence and $3 million in aggregate. This insurance protects Fly Fitness franchisees from potential financial losses due to lawsuits or claims related to professional negligence or misconduct, as well as incidents of sexual abuse.
In addition to professional liability coverage, Fly Fitness requires franchisees to carry other types of insurance, including worker's compensation, business interruption insurance, property insurance, and comprehensive automobile insurance. The specific coverage amounts and terms for these other policies are also outlined in the FDD. Franchisees must ensure that all insurance policies are written by carriers acceptable to Fly Fitness and that Fly Fitness and its officers, directors, partners, agents, and employees are named as additional insured parties.
The insurance requirements are designed to protect both the franchisee and Fly Fitness from financial losses resulting from various risks associated with operating a fitness business. Failure to maintain the required insurance coverage could result in a breach of the Franchise Agreement and potential penalties. It is important for prospective franchisees to carefully review the insurance requirements outlined in the FDD and consult with an insurance professional to ensure they obtain adequate coverage.
Franchisees should factor the cost of these insurance policies into their overall business plan. The franchisor reserves the right to require additional types of insurance and coverage as provided in the Franchise Agreement.