Must a Spray Net franchisee name the franchisor as an additional insured on all insurance policies?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee must buy insurance only from carriers rated A-VIII or better by A.M. Best and Company, Inc. (or similar criteria as Franchisor periodically specifies), unless Franchisor designates specific carriers from which Franchisee must purchase coverage (in which case Franchisee may only purchase from the designated carrier(s)). Franchisor may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverage to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards, changing economic conditions, or other relevant changes in circumstances. All insurance policies Franchisee purchases must name Franchisor and any affiliate Franchisor designate as additional insureds, and provide for thirty (30) days' prior written notice to Franchisor of a policy's material modification or cancellation. The cost of Franchisee's premiums will depend on the insurance carrier's charges, terms of payment, and Franchisee's insurance and payment histories. Franchisee shall make timely delivery of certificates of all required insurance to Franchisor, each of which shall contain a statement by the insurer that the policy will not be cancelled or materially altered without at least thirty (30) days' prior written notice to Franchisor. The procurement and maintenance of such insurance shall not relieve Franchisee of any liability to Franchisor under any indemnity requirement of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 75–219)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, franchisees are required to include Spray-Net Inc. as an additional insured on all insurance policies. This requirement ensures that Spray Net is protected under the franchisee's insurance coverage for potential liabilities arising from the franchisee's operations.
Spray Net franchisees must secure insurance policies from carriers with a rating of A-VIII or better from A.M. Best and Company, Inc., or meet similar criteria specified by Spray Net. However, Spray Net retains the right to designate specific insurance carriers from which franchisees must obtain coverage, potentially limiting the franchisee's choice of providers. Spray Net also has the ability to periodically adjust the required coverage amounts or mandate different or additional insurance coverage to accommodate factors like inflation, new risks, legal changes, or economic conditions.
The insurance policies must provide Spray Net with thirty days' prior written notice of any material modification or cancellation of the policy. Franchisees are responsible for the costs of their insurance premiums, which will vary based on the insurance carrier's charges, payment terms, and the franchisee's insurance and payment history. Franchisees must also provide timely certificates of insurance to Spray Net, confirming that the policies will not be canceled or materially altered without at least thirty days' prior written notice to Spray Net. It is important to note that obtaining and maintaining insurance does not relieve the franchisee of any liability to Spray Net under any indemnity requirement in the Franchise Agreement.