Mobile established franchising firms must think about the possible eventuality of being named in a lawsuit, which can be directed in a franchisee because of a traffic accident whilst conducting the franchise sockets business operations. In areas like New York, California, Washington D.C. the variety of lawsuits against traffic injuries are astonishing. Without security and separation from the franchise sockets, a franchisor could unnecessarily start up themselves for accountability problems of one of the franchisees.
It’s for this reason that in my home arrangements have been determined to devote special focus on the exemptions about insurance, limits of liability and operations of automobiles at the franchise industry. Below is a copy of the clause that I inserted to our franchise arrangements;
3.21.1 Limits of Obligation
Before the commencement of any operations under this Agreement, Franchisee must keep, in their sole cost, a company liability, comprehensive and completed operations insurance policy or policies according to standards and specifications set forth in the Confidential Operations Manual, which must include at a minimum the following policy:
(a) Comprehensive Medical Equipment Manufacturers Insurance, in the sum of $100,000 bodily injury per occurrence and $50,000 property damage per occurrence;
(b) Vehicle insurance in the amount of $100,000 single limit, such as collision and comprehensive;
(c) Employee ‘s Compensation and Employer’s liability insurance (if Franchisee has workers ); and
(d) Gear insurance for the worthiness of all of the Car Wash Guys gear. If Franchisee financing the gear, the lending institution may also require Franchisee to keep fire/theft/comprehensive insurance for the value of that gear.
3.21.2 Additional Insured
Franchisor shall be named as an additional insured under all insurance coverages, as its interests may appear, and include a waiver from the carrier of subrogation rights against Franchisor. Care of insurance under this paragraph will not relieve Franchisee of accountability under the default provisions put forth within this Agreement.