Franchises can be highly lucrative but these businesses do not come without risk. Under a typical franchise model, the franchisee owns and operates an independent business and the franchisor has the opportunity to grow the brand and earn a new income stream.
One wrong step and a franchise could suffer reputational damage, labor violations, FDD compliance issues and similar problems. Franchisors tend to have specific insurance requirements as part of their franchisee contract in order to avoid large risks. At John M. Glover Insurance Agency, we review the required coverages needed to meet the franchisee’s contractual requirements assuring that our franchisees are compliant.
Importance of Franchise Insurance
When a person agrees to run a franchise, they assume certain responsibilities. All business activities run the risk of affecting employees, customers and stakeholders either in a positive or negative way. Acquiring business insurance protects franchise owners from many of the consequences of operating a business.
Insurance for Franchises
Running a franchise is similar to running any business but with some distinct differences. In many cases, the groundwork has already been laid allowing franchise owners to focus on other core business activities. Examples of the types of insurance policies that all franchise owners should carry to protect their business and its employees include :
- General Liability Insurance – Also known as commercial general liability, general liability insurance is one of the most sought-after commercial policies for business owners in all industries. General liability insurance protects both the owner and parent company from claims of personal injury if a customer is injured on the premises, such as in a slip and fall accident.
- Business Interruption Insurance – Sometimes referred to as loss of business income insurance, business interruption insurance covers certain events that occur beyond the owner’s control. Natural disasters, structure fires, government shutdowns, freak accidents and similar events can cause property damage. Business interruption insurance helps cover fixed expenses during the rebuild.
- Equipment Breakdown Insurance – An equipment breakdown insurance policy can help cover any losses caused by any electrical or mechanical breakdown of business equipment, such as refrigerators or computers. Equipment breakdown policies may cover the cost to repair or replace any property damaged as a result of the breakdown.
- Commercial Auto Liability Insurance – Many franchises rely on vehicles to run errands, pick up supplies, deliver goods or perform other essential tasks. When a company vehicle suffers damage or is totaled, it can disrupt normal business operations. Commercial auto liability insurance can help cover the cost of an auto repair or replacement in the event of a covered vehicle accident.
- Excess Liability Coverage – Many franchises invest in excess liability coverage to supplement their other underlying liability insurance policies. Excess Liability can provided additional limits of coverage further protecting their business.
- Property Insurance -If you are preparing your business franchise you will need a location. Ensuring that location is not only smart but necessary. While it is not easy anticipating damages, thinking ahead will save you money in the long run.
- Workers Comp Insurance – No matter the franchise, injuries can always happen. Even with company safety protocols, there is still a risk for any employee. Workers compensation insurance covers on-the-job bodily accidents and any diseases or lasting medical problems caused by employment conditions.
Speak with the Insurance Professionals
Looking for the right insurance coverage for your franchise? John M. Glover Insurance Agency has the expertise to help. To learn more about insurance policies for franchises or to request a quote, contact the insurance professionals at JMG Insurance Agency