Under what conditions can Spray Net designate specific insurance carriers from which franchisees must purchase coverage?
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, franchisees are generally required to obtain insurance from carriers with an A-VIII or better rating from A.M. Best and Company, Inc. However, Spray Net retains the right to designate specific insurance carriers from which franchisees must purchase their coverage. In such cases, franchisees are obligated to purchase insurance exclusively from the designated carriers.
Spray Net also has the ability to modify the required coverage amounts or types of insurance policies. These changes can be made to reflect factors such as inflation, the identification of new risks, changes in laws or liability standards, higher damage awards, changing economic conditions, or other relevant changes in circumstances.
All insurance policies obtained by Spray Net franchisees must name Spray Net and any designated affiliates as additional insureds. Furthermore, the insurance policies must provide Spray Net with at least thirty (30) days' prior written notice of any material modification or cancellation of the policy. Franchisees are responsible for ensuring timely delivery of insurance certificates to Spray Net, including a statement from the insurer confirming that the policy will not be canceled or materially altered without the required notice.