Are Fly To Fit franchisee insurance policies required to be primary and non-contributing with any insurance carried by the franchisor?
Fly_To_Fit Franchise · 2024 FDDAnswer from 2024 FDD Document
cific Obligations
The following are our current specific obligations for purchases and leases:
- A. Real Estate. Your business location is subject to our approval and must meet our specifications. You must use reasonable efforts to have your landlord sign our form of Rider to Lease Agreement (attached to this disclosure document as Exhibit D).
- B. Insurance. You must obtain insurance as described in the Franchise Agreement and in our Brand Standards Manual, which includes (i) "Special" causes of loss coverage forms, including fire and extended coverage, crime, vandalism, and malicious mischief, on all property of the Business, for full repair and replacement value (subject to a reasonable deductible); (ii) Business interruption insurance covering at least 12 months of income; (iii) Commercial General Liability insurance, including products liability coverage, and broad form commercial liability coverage, written on an "occurrence" policy form in an amount of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, (iv) Business Automobile Liability insurance including owned, leased, non-owned and hired automobiles coverage in an amount of not less than $1,000,000, and (v) Workers Compensation coverage as required by state law.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 19–21)
What This Means (2024 FDD)
According to Fly To Fit's 2024 Franchise Disclosure Document, franchisees are required to maintain specific insurance coverage, and these policies must be primary and non-contributing with any insurance held by Fly To Fit or its affiliates. This means that in the event of a claim, the franchisee's insurance policy is the first one that must respond and pay out, before any insurance policies held by Fly To Fit are considered.
This requirement is fairly standard in franchising, as it protects the franchisor's insurance coverage and ensures that the franchisee takes primary responsibility for managing risks associated with their individual business operations. Additionally, Fly To Fit and its affiliates must be listed as an additional insured on the franchisee's policies (excluding Workers Compensation) and receive a waiver of subrogation. This provides further protection to Fly To Fit, as it prevents the insurance company from pursuing claims against them in certain situations. Fly To Fit must also receive 30 days' prior written notice of cancellation of the franchisee's insurance policies.
The required insurance coverage includes "Special" causes of loss coverage forms, Business interruption insurance covering at least 12 months of income, Commercial General Liability insurance of not less than $1,000,000 single limit per occurrence and $2,000,000 aggregate limit, Business Automobile Liability insurance of not less than $1,000,000, and Workers Compensation coverage as required by state law. Franchisees must ensure they obtain the specified coverage limits and policy terms to comply with Fly To Fit's requirements.
Prospective Fly To Fit franchisees should carefully review the insurance requirements outlined in the Franchise Agreement and Brand Standards Manual to understand the full scope of their obligations and associated costs. It is advisable to consult with an insurance professional to obtain appropriate coverage that meets Fly To Fit's standards and protects the franchisee's business interests.