Does the Mrcool FDD outline the 'Minimum Coverage Amounts' required for general insurance?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must procure and maintain in full force at all times during the Term of this Agreement, at Franchisee's sole expense, on a primary rather than a participatory basis with Franchisor, an insurance policy or policies protecting Franchisee as named insured and naming, as additional insureds, Franchisor, Franchisor's affiliates, Franchisor's successors and assigns, and the officers, directors, shareholders, partners, agents, representatives, independent contractors and employees of Franchisor against any demand or claim with respect to personal injury, death or property damage, or any loss, liability or expense whatsoever arising or occurring upon or in connection with the Franchised Business. The policy or policies must be written by a responsible carrier or carriers with an AM Best Rating of at least A-, VII and reasonably acceptable to Franchisor.
The currently required insurance policies, insurance coverage requirements, and insurance coverage amounts are designated and set forth in the Operations Manual. Franchisor may, in Franchisor's Reasonable Business Judgment, periodically change the amounts of coverage required under such insurance policies and require different or additional kinds of insurance at any time, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances. Notwithstanding the immediately foregoing sentence, Franchisor shall not increase such minimum coverage more than once every two years. All public liability and property damages policies must contain a provision that Franchisor is entitled to recover under these policies on any loss occasioned to Franchisor, Franchisor's affiliates, Franchisor's successors and assigns, and the officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, and employees of Franchisor by reason of the negligence of Franchisee and/or Franchisee's officers, directors, shareholders, members, owners, partners, agents, representatives, independent contractors, and employees.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to the 2025 Mrcool FDD, franchisees are required to maintain insurance policies throughout the term of their agreement. These policies must protect the franchisee and also name Mrcool and its affiliates as additional insureds against claims related to personal injury, death, property damage, loss, liability, or expenses connected to the franchised business. The insurance must be written by carriers with an AM Best Rating of at least A-, VII, and be reasonably acceptable to Mrcool.
The specific details regarding the required insurance policies, coverage requirements, and coverage amounts are outlined in Mrcool's Operations Manual. Mrcool retains the right to modify these coverage amounts and require different or additional insurance types, including excess liability insurance, to account for factors like inflation, new risks, changes in law, or higher damage awards. However, Mrcool will not increase the minimum coverage more than once every two years.
Prospective Mrcool franchisees should note that failure to maintain the required insurance allows Mrcool to procure insurance on their behalf, charging the franchisee for all associated costs and a reasonable administrative fee. Furthermore, all public liability and property damage policies must include a provision that Mrcool can recover under these policies for any losses caused by the negligence of the franchisee or their employees. It is crucial for franchisees to review the Operations Manual carefully and stay informed of any changes to insurance requirements to avoid potential penalties and ensure compliance with the franchise agreement.