What insurance-related documentation must a Hardees franchisee furnish to HR before opening the franchised restaurant?
Hardees Franchise · 2025 FDDAnswer from 2025 FDD Document
Liability coverage, the Umbrella/Excess Liability must be "following form" of the underlying Commercial General Liability, Automobile Liability, and Employer's Liability coverages.
- (4) Commercial Property insurance that extends coverage on a replacement cost basis for the Franchised Restaurant, business personal property (including electronic equipment, tenant improvements & betterments), and business income and extra expense for a minimum of 12 months or actual loss sustained to cover loss of profits, continuing expenses and loss of rents. Covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%. Flood insurance is also required for locations that reside in FEMA Flood Zones beginning with the letters "A" or "V." Earthquake insurance is also required for locations that reside in FEMA Seismic Design Categories "E" or "D."
- (5) Cyber Liability (network security/data privacy) with policy limits not less than $1,000,000 per occurrence.
- (6) In connection with any construction, leasehold improvements, renovation, refurbishment, or remodeling of the Franchised Restaurant, Franchisee's general contractor shall maintain Commercial General Liability insurance (with products liability and independent contractors coverage), Automobile Liability coverage for owned, leased, hired and non-owned vehicles, and Builder's Risk with limits no less than $1,000,000, with HR named as an additional insured, as well as Workers' Compensation and Employer's Liability as required by state law.
HR may regulate the types, amounts, terms and conditions of insurance coverage required for the Franchised Restaurant, and standards for underwriters of policies providing required insurance coverage, i
Source: Item 22 — Contracts (FDD page 85)
What This Means (2025 FDD)
According to Hardees's 2025 Franchise Disclosure Document, Hardees (referred to as HR in this document) may require franchisees to furnish periodic verification of insurance coverage. This includes documentation that must be provided to HR. The specific types of documentation are not detailed in this excerpt.
Hardees regulates the types, amounts, terms, and conditions of insurance coverage required for the franchised restaurant. They also set standards for the underwriters of the policies. This includes ensuring HR's protection as an additional insured or loss payee, specifying required or permissible insurance contract provisions, and potentially requiring assignment of policy rights to HR.
These insurance policies must also adhere to general requirements, such as being specifically endorsed to provide primary coverage over any insurance carried by additional insured parties. The policies should not limit or reduce coverage for the franchisee in the event of a claim by Hardees or its affiliates. Additionally, the insurance must extend to all obligations and liabilities of the franchisee to third parties and cover all items for which the franchisee is required to indemnify Hardees under the franchise agreement. The insurance company must have an "A- VIII" or better rating by A.M. Best Company (or another rating service designated by HR) and be satisfactory to HR, with a deductible amount not exceeding $100,000 unless otherwise approved by Hardees in writing.
Prospective Hardees franchisees should seek clarification from Hardees regarding the specific insurance documentation required, the acceptable insurance providers, and any potential waivers or exceptions to the standard insurance requirements. Understanding these requirements is crucial for budgeting and ensuring compliance with the franchise agreement.