Does Spray Net require employer's liability and workers' compensation insurance?
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 employer's liability and workers' compensation insurance. This is in addition to other insurance policies Spray Net mandates. The specific amount of coverage required for worker's compensation is not detailed in this section but is likely determined by the statutes or rules of the state or locality where the franchised business operates.
Spray Net also requires franchisees to secure commercial general liability insurance of at least $2,000,000 per occurrence for bodily injury and another $2,000,000 per occurrence for property damage. Additionally, franchisees must maintain fire, vandalism, and extended coverage insurance equivalent to the full replacement value of the premises, including furniture, fixtures, and equipment. Auto insurance with a minimum of $2,000,000 per year in liability coverage is also mandatory for any vehicle used in connection with the Spray Net franchise.
Spray Net franchisees must also carry business interruption insurance with terms acceptable to Spray Net and any other insurance necessary to fulfill the indemnity provisions outlined in Section 11 of the Franchise Agreement. All insurance must be obtained from carriers with an A-VIII rating or better from A.M. Best and Company, unless Spray Net designates specific carriers. Franchisees must name Spray Net as an additional insured on all policies and provide them with 30 days' written notice of any material modification or cancellation. The cost of these premiums will vary based on the insurance carrier's rates, payment terms, and the franchisee's insurance and payment history.
It is important for prospective Spray Net franchisees to understand these insurance requirements, as failure to maintain adequate coverage could result in a breach of the franchise agreement. Franchisees should consult with an insurance professional to determine the appropriate levels of coverage for their specific circumstances and to ensure compliance with all Spray Net and local regulatory requirements.