Essential Guidelines to Writing Proper Franchise Insurance Requirements

Technically, one of the advantages of franchise ownership is that one has the backing of an in-built corporation to offer guidance in growth as a journey. Even though it’s valuable, it is important to note that there are significant measures that one needs to take on his own to offer protection in cases like customer injury, inventory loss on one’s property, etc. Various types of insurance are in place and this can be taken in ensuring that your business is protected from financial loss. This can offer guidance on which types of insurance are required and even most recommended.

Franchise agreement that offers contract between the franchisor and the one offering it

“In building a proper franchise insurance requirement, it is important to first consider a franchise agreement that offers a contract between the franchisor and the one offering it,” says Abigail Lee, Senior Legal Writer at ConfidentWriters and Assignment Writing Service. However, this is not a standard or form nature of agreement. Basically, the contract format tends to be different from one franchise system to the other. In writing the guidelines, capital plays a major role and every individual understands that pursuing any business with incorporating a necessary capital resource is a clear preparation for disaster.


Another guideline that needs to be considered is insurance. It is important to note that before that is able to commence operations of their location, he or she must purchase and ensure their expenses are maintained at all times during the case of the franchise agreement. Basically, the insurance needed involves comprehensive general liability insurance, causality insurance, property, statutory workers compensation insurance and business interruption insurance.

Understand your risk

It is important for one to understand his or her risk; that’s what the services or the product that the franchisee is offering. Questions like, how about going to business or homes, or managing other properties? Is there driving involved? Is there great amount of turnover among the workers, and are there any professional services offered at the same time? are some examples demonstrating that in case of your business model, one major step is to completely understand where and what one’s risk are. “This can be done by writing perfect requirements that facilitate in risk reduction,” notes Brian Williams, Contracts Specialist at Popular Quotes and Article Critique Service.

Be Specific

Additionally, it is important for one to be specific. With a demonstration of the example, it is important to note that there is no mention of which type of risk one is actually working to protect. In most cases, insurance stands out a component that is not generic and, in most cases, not most of the general liability policies have equal creation. Once one understands and identifies the risks, he or she needs to write an insurance requirement language that is tailor-made to offer protection to franchisees should one of such risks take place. The suggestion is for one to offer a list of that individual coverage he or she needs in regards to risk identification. Through an example, items like sexual abuse, host liquor, molestation, employment practices, crime and various issues have to be individually listed.

Tracking as an important element

It is important to note that telling franchisees that they are supposed to manage this and not following up is just the same as telling your children to make their room clean and failing to check if everything is orderly done. Franchisees must understand why insurance requirements are significant and that one is actually tracking them. On an annual basis, one needs to understand that all the franchises sent in their certificate of insurance to you and there is need for them to review when it comes to making sure that they are in compliance.

Notably, it’s a major requirement to be listed as additional insured on franchisees policies offering coverage for one and under the policies that form the term of limits, should one, as the franchisor, be set in order into a claim that tends to rise out of the location of the franchisee.

Need to work with an insurance broker with the expertise of the franchise industry

Finally, great guideline is that one needs to work with an insurance broker with the expertise of the franchise industry. Going with the fact that one doesn’t have the estate attorney advise on franchise legal matters, it is important to understand that one shouldn’t have your size fit all insurance agent advise on managing and setting up a franchise insurance program. One needs to look for an insurance expert with the experience, the background and knowledge when it comes to advising one and other franchisees on how to effectively offer protection on your future and investment at the same time.

Author bio

Paul Bates is a Chief Editor at EssayTask and SwiftPapers. He shares his knowledge at Medium, HuffPost and EssayBoom.

Essential Guidelines to Writing Proper Franchise Insurance Requirements