Can Spray Net increase the amounts of coverage required under the insurance policies?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
You must buy insurance only from carriers rated A-VIII or better by A.M. Best and Company, Inc. (or similar criteria as we periodically specify), unless we designate specific carriers from which you must purchase coverage (in which case you may only purchase from the designated carrier(s)). We 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 you purchase must name us and any affiliate(s) we designate as additional insureds and provide for thirty (30) days' prior written notice to us of a policy's material modification or cancellation. The cost of your premiums will depend on the insurance carrier's charges, terms of payment, and your insurance and payment histories. You must make timely delivery of certificates of all required insurance to us, each of which must 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 us.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 33–36)
What This Means (2025 FDD)
According to Spray Net's 2025 Franchise Disclosure Document, Spray Net has the right to periodically increase the required amounts of insurance coverage. These adjustments can be made to reflect factors such as inflation, the identification of new risks, changes in laws or liability standards, higher damage awards, or changing economic conditions. This means that a franchisee's insurance costs could rise over time as Spray Net adjusts the required coverage levels.
Spray Net also has the authority to require different or additional insurance coverage based on the same factors. All insurance policies must name Spray Net and any designated affiliates as additional insureds. Additionally, Spray Net requires a thirty-day prior written notice in the event of a policy's material modification or cancellation.
For a prospective Spray Net franchisee, this indicates that insurance expenses are not fixed and can increase. It is important to factor in potential future increases in insurance costs when evaluating the financial viability of the franchise. Franchisees should discuss with Spray Net what factors might trigger an increase in coverage requirements and how often these adjustments are typically made.