Does the security agreement for a Jersey Mikes franchise extend to proceeds from business interruption insurance related to the Debtor's property?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
d by Franchisor to Franchisee during Franchisor's initial training program.
15. INSURANCE
15.1 Franchisee shall procure at its expense and maintain in full force and effect during the term of this Agreement, an insurance policy or policies protecting Franchisee, Franchisor, and Franchisor's affiliate, Jersey Mike's Franchise Systems, LLC ("JMFS"), and their respective partners, members, officers, directors, employees and representatives, against any loss, liability, personal injury, death, or property damage or expense whatsoever arising or occurring upon or in connection with the Franchised Restaurant, as Franchisor may reasonably require for its own and Franchisee's protection. Franchisor and JMFS shall each be named an additional insured in such policy or policies using the following language: "For Store #_______, Jersey Mike's Franchise Systems, LLC and A Sub Above, LLC are named as additional insureds for general liability purposes and 30 day notice of cancellation applies." Franchisee shall list "Jersey Mike's Franchise Systems, LLC, 2251 Landmark Place, Manasquan, New Jersey 08736" as certificate holder. Said policies shall be secured by F ranchisee before the date on w hich Franchisee takes possession and commences development of the Premises from which it will operate the Franchised Restaurant (except that, if Franchisee's employees begin training prior to such date, workers' compensation and employer's liability insurance must be in place prior to the date such employees begin training). If Franchisee or an owner of Franchisee will participate in training, such individual must be covered by a workers' compensation policy and may not be excluded from such policy.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the excerpts provided do not specify whether the security agreement for a Jersey Mike's franchise extends to proceeds from business interruption insurance related to the Debtor's property. However, the FDD does discuss insurance requirements for franchisees.
Item 22 outlines various contracts related to the Jersey Mike's franchise system, including securitization transactions, management agreements, and insurance policies. Specifically, it mentions that franchisees must maintain insurance policies to protect against loss, liability, personal injury, death, or property damage related to the franchised restaurant. Jersey Mike's and its affiliate, Jersey Mike's Franchise Systems, LLC, must be named as additional insureds on these policies.
While the FDD details the types of insurance coverage required, such as commercial general liability insurance, it does not explicitly state whether business interruption insurance is mandatory or if the proceeds from such insurance are subject to a security agreement. A prospective franchisee should clarify these details with Jersey Mike's to fully understand the scope of the security agreement and insurance requirements.