Does Monicals Pizza require business interruption insurance, and if so, what are the requirements?
Monicals_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
Within ninety (90) days of the Effective Date, but in no event later than the commencement of operations, Franchisee shall procure and thereafter maintain in full force and effect during the term of this Agreement, the insurance listed below. The liability policy including any applicable umbrella/excess policies shall expressly name Franchisor as an additional insured. In addition to any other insurance that may be required by applicable law, or by any lender or lessor, Franchisee shall procure:
- o "Special Form" (all risk) property insurance coverage on all assets including inventory, furniture, fixtures, equipment, supplies, and leasehold improvements and betterments and other property used in the operation of the Franchised Restaurant at full replacement cost;
- o Workers' compensation insurance that complies with the statutory requirements of the state in which the Franchised Restaurant is located and employer liability coverage with a minimum limit of ONE MILLION DOLLARS ($1,000,000.00) or, if higher, the statutory minimum limit as required by applicable state law;
- o Commercial general liability insurance against claims for bodily and personal injury, death and property damage caused by, or occurring in conjunction with, the operation of the Franchised Restaurant, including premises and operations, contractual liability, products completed operations and personal and advertising injury, with minimum limits of liability for each type of insurance of ONE MILLION DOLLARS ($1,000,000.00) per occurrence and TWO MILLION DOLLARS
($2,000,000.00) general aggregate or higher if required by any landlord or lease agreement or by state law
- o Liquor liability/dram shop policy with a minimum liability coverage of ONE MILLION DOLLARS ($1,000,000.00) per occurrence and TWO MILLION DOLLARS ($2,000,000.00) in the aggregate or, if higher, the statutory minimum limit required by applicable state law;
- o Automobile liability insurance including liability coverage for autos owned, hired or borrowed, if applicable, by Franchisee, and liability coverage for autos owned by others ("non-owned auto" coverage) with limits of not less than ONE MILLION DOLLARS ($1,000,000.00) per occurrence for bodily injury and property damage combined;
- o Umbrella excess liability insurance with a minimum liability coverage of TWO MILLION DOLLARS ($2,000,000.00) (umbrella excess liability must provide coverage in excess of commercial general liability, liquor liability, automobile liability and employers liability limits);
- o Business interruption insurance in amounts and with terms acceptable to Franchisor;
- o Cyber insurance policy with a minimum liability coverage of $1,000,000:
- o Restaurant Recovery Insurance (or equivalent) due to Food Borne Illness with a minimum liability coverage of $1,000,000: and
- o Such insurance as necessary to provide coverage under the indemnity provisions set forth in Section 21.3.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT (FDD pages 12–17)
What This Means (2025 FDD)
According to Monicals Pizza's 2025 Franchise Disclosure Document, franchisees are required to obtain business interruption insurance. The specific amounts and terms of the business interruption insurance must be acceptable to Monicals Pizza. This requirement is part of a broader set of insurance obligations that franchisees must fulfill within ninety (90) days of the Effective Date, but no later than the commencement of operations.
In addition to business interruption insurance, Monicals Pizza franchisees must also secure other types of coverage, including property insurance, workers' compensation, commercial general liability insurance, liquor liability/dram shop policy, automobile liability insurance, umbrella excess liability insurance, cyber insurance, and restaurant recovery insurance due to food borne illness. The commercial general liability insurance must have minimum limits of $1,000,000 per occurrence and $2,000,000 in the general aggregate, or higher if required by any landlord, lease agreement, or state law. The umbrella excess liability insurance must have a minimum liability coverage of $2,000,000, providing coverage beyond the limits of commercial general liability, liquor liability, automobile liability, and employer's liability.
The cost of insurance, including business interruption coverage, is estimated to be between $7,000 and $15,000, although this can vary based on factors such as the size and location of the restaurant, the value of leasehold improvements, and the number of employees. Franchisees should inquire about the cancellation and refund policies of insurance carriers or agents before purchasing any policies, as these amounts are typically non-refundable. Furthermore, the liability policy including any applicable umbrella/excess policies shall expressly name Monicals Pizza as an additional insured.
It is important for prospective Monicals Pizza franchisees to carefully review all insurance requirements and associated costs to ensure they can meet these obligations. Given that the specific terms and amounts for business interruption insurance must be acceptable to Monicals Pizza, franchisees should seek clarification from the franchisor regarding their expectations and any specific requirements for this type of coverage.