As a Training Pre-Condition, what must a Spray Net franchisee demonstrate regarding insurance coverage?
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 must secure insurance coverage from carriers with a rating of A-VIII or better by A.M. Best and Company, Inc., or meet similar criteria specified by Spray Net. However, Spray Net may designate specific insurance carriers from which franchisees are required to purchase coverage, in which case the franchisee must use the designated carrier(s).
Spray Net retains the right to periodically adjust the required coverage amounts or mandate different or additional insurance coverage to account for factors such as inflation, new risks, changes in laws or liability standards, higher damage awards, or changing economic conditions. All insurance policies must name Spray Net and any designated affiliates as additional insureds and provide Spray Net with at least thirty days' prior written notice of any material modification or cancellation of the policy.
Franchisees are responsible for the cost 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 provide Spray Net with timely certificates of all required insurance, 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. Securing and maintaining insurance does not relieve the franchisee of any liability to Spray Net under any indemnity requirement in the Franchise Agreement.