Does Spray Net require business interruption insurance, and if so, what are the requirements?
Spray_Net Franchise · 2025 FDDAnswer from 2025 FDD Document
any further benefit as a result of your compliance with these requirements.
Insurance Requirements
We require you to procure the following types of insurance and applicable amounts of coverage:
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- Commercial general liability insurance, including personal injury, completed operations, contractual liability, and products liability, in an amount of not less than Two Million Dollars ($2,000,000) per occurrence for bodily injury and not less than Two Million Dollars ($2,000,000) per occurrence for property damage, and naming us as an additional insured in each such policy or policies;
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- Fire, vandalism, and extended coverage insurance with primary and excess limits of not less than the full replacement value of the premises of the Franchised Business and its furniture, fixtures, and equipment;
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- Auto insurance for any Approved Vehicle used in connection with operating the Franchised Business, including Franchisee-owned vehicles and non-Franchisee-owned vehicles, which will include liability coverage in the minimum amount of Two Million Dollars ($2,000,000) per year, as well as commercial auto insurance for Franchisee-owned vehicles, which will include collision and comprehensive coverage as well as liability coverage in the minimum amount of $250,000 per person and $500,000 per accident per year, or the minimum required by state regulations, whichever is greater;
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- Employer's liability, workers' compensation insurance and such other insurance as may be required by statute or rule of the state or locality in which the Franchised Business is located and operated;
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- Business interruption insurance in amounts and with terms acceptable to us; and
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- Such insurance as necessary
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, franchisees are required to obtain business interruption insurance. The specific amounts and terms of this insurance must be acceptable to Spray Net. This type of insurance is designed to protect the franchisee from financial losses in the event that their business operations are temporarily suspended due to unforeseen circumstances such as fire, natural disasters, or other covered events.
In addition to business interruption insurance, Spray Net mandates several other types of insurance coverage. These include commercial general liability insurance with a minimum of $2,000,000 per occurrence for bodily injury and $2,000,000 per occurrence for property damage, fire, vandalism, and extended coverage insurance for the full replacement value of the premises, auto insurance with liability coverage of $2,000,000 per year, and employer's liability and workers' compensation insurance as required by state or local laws. Franchisees must also secure insurance to cover indemnity provisions outlined in the Franchise Agreement.
Spray Net requires that all insurance policies be purchased from carriers with a rating of A-VIII or better by A.M. Best and Company, Inc., unless Spray Net designates specific carriers. Spray Net may also increase the required coverage amounts or require additional insurance types to reflect changes in risks, laws, economic conditions, or other relevant factors. Franchisees must ensure that Spray Net and any designated affiliates are named as additional insureds on all policies and that the insurance provider gives Spray Net thirty days' prior written notice of any material modification or cancellation of a policy.
The cost of insurance premiums will vary depending on the insurance carrier's charges, payment terms, and the franchisee's insurance and payment history. Franchisees are responsible for providing timely certificates of insurance to Spray Net, including a statement from the insurer that the policy will not be canceled or materially altered without at least thirty days' prior written notice to Spray Net. This comprehensive insurance requirement ensures that both the franchisee and Spray Net are protected from potential financial losses and liabilities.