What A.M. Best rating must the insurance providers have for Potbelly Sandwich Works franchisees?
Potbelly_Sandwich_Works Franchise · 2025 FDDAnswer from 2025 FDD Document
Besides these purchases and leases, you must obtain and maintain at your own expense insurance coverage of the types and in the minimum amounts we require and any other insurance coverage that might be required by your state, city or municipality. Such insurance must be obtained from reputable insurers having an A.M. Best rating of A- VII or better. Although we might want more or different types of coverage in the future, required coverage currently includes commercial general liability insurance of $1 million per occurrence and $2 million in the aggregate, including $300,000 in coverage for fire legal liability (if a leased premises). Coverage must be primary and non-contributory to any other coverage we have, provide waiver of subrogation and there should be at least $1 million for personal and advertising injury; $1 million in automobile liability covering all owned (if any), non-owned, and hired vehicles; umbrella liability insurance of at least $2 million per occurrence; employment practices liability of at least $1,000,000, including third-party liability and endorsement naming us as Additional Insured; statutory workers' compensation insurance the law requires, including employer's liability for at least $1 million; property insurance for the replacement cost of your leasehold improvements, equipment, and business personal property; business income and extra expense coverage for not less than 6 months of sales; employee dishonesty insurance of at least $25,000 and any other insurance required by your lender or landlord; and cyber-security insurance of at least $1 million limit and PCI Fines and Penalties sub-limit of $500,000. The commercial general liability, auto liability, and umbrella liability insurance must name us and our affiliates as additional insured parties for claims arising from your Shop's operation. You must send us a certificate that provides evidence of your insurance before you begin operations or when you sign a lease or sublease and every year afterward at least 10 days before the renewal or anytime we so request. The certificate should show that your liability insurance company will give us at least 30 days' prior written notice of the coverage's cancellation. If you do not send us a certificate of insurance complying with our requirements, we have the right but no obligation to buy the coverage for you and charge you the premium and any administrative fee that might be due (for which you must reimburse us immediately).
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 28–34)
What This Means (2025 FDD)
According to Potbelly Sandwich Works' 2025 Franchise Disclosure Document, franchisees must secure insurance coverage from reputable insurers with an A.M. Best rating of A- VII or better. This requirement ensures that the insurance providers are financially stable and capable of fulfilling their obligations in the event of a claim.
Potbelly Sandwich Works mandates specific types and minimum amounts of insurance coverage, including commercial general liability insurance of $1 million per occurrence and $2 million in the aggregate, automobile liability of $1 million, umbrella liability insurance of at least $2 million per occurrence, employment practices liability of at least $1,000,000, statutory workers' compensation insurance, property insurance for the replacement cost of leasehold improvements, equipment, and business personal property, business income and extra expense coverage for not less than 6 months of sales, employee dishonesty insurance of at least $25,000 and cyber-security insurance of at least $1 million limit and PCI Fines and Penalties sub-limit of $500,000. Franchisees must also name Potbelly Sandwich Works and its affiliates as additional insured parties for commercial general liability, auto liability, and umbrella liability insurance.
Before commencing operations or signing a lease, franchisees must provide Potbelly Sandwich Works with a certificate of insurance as evidence of coverage. This certificate must be provided annually at least 10 days before renewal or anytime Potbelly Sandwich Works requests it. The certificate should also indicate that the liability insurance company will provide at least 30 days' prior written notice of cancellation to Potbelly Sandwich Works. Failure to comply with these insurance requirements grants Potbelly Sandwich Works the right, but not the obligation, to procure the necessary coverage on behalf of the franchisee and charge them for the premium and any associated administrative fees.