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Thanks to the regulation of the Federal Trade Commission, potential franchisees have a wealth of information at their disposal about a franchisor to help them make more educated decisions about their investments. &nbsp;Investing in a franchise is a tremendous decision, and it is one that should be properly insured. Therefore, considering what properly insuring a franchise entails is important when making such a decision.

The Franchise Disclosure Document (FDD) provides information about the franchisor, the franchise systems, and franchisee agreements. It includes information about fees, estimated costs, and contractual obligations. This is where the insurance coverage a franchisor requires can be found. While not all FDDs are the same, here are some best practices to help find and better understand the insurance references found in this document.

Here are some places where insurance is typically mentioned:

<ul>
	<li>Item 9 can act as a Table of Contents for the FDD. This item is an overview of what obligations a franchisee is responsible for and where those are found within the FDD. Included in this should be references to insurance requirements. So, this is a good place to start when reviewing insurance stipulations.</li>
	<li>Item 6 will usually show line items of upfront and ongoing fees. Insurance will likely be mentioned here and the franchisee&rsquo;s obligation to procure and maintain adequate coverage.</li>
	<li>Item 7 lays out fees and expenses required to open and operate a franchise for the first few months. This is an estimation of the initial investment. Typically included is a projected range of insurance premiums.</li>
	<li>Elsewhere in the FDD will be a detailed explanation of all coverages required. This may be presented as an exhibit or note within the FDD.&nbsp; Specific details of franchisee insurance obligations should be listed. It should also stipulate when coverage needs to commence and that it is requisite to maintain full coverage thereafter throughout the term of the franchise agreement. This section generally names who is to be covered via additional insured endorsement and what proof of insurance needs to be provided. Common insurance coverages required in the FDD include but are not limited to: business interruption (specifically that royalty fees be paid), comprehensive general liability, all risk and all peril property coverage, workers compensation, and umbrella liability. Every business&rsquo; coverage needs vary and it is important to pay close attention to what is required by the specific franchisor.</li>
</ul>

Insuring your investment is not only a prudent business decision, it is also part of the franchise agreement.&nbsp; Program Insurance Group has the franchise knowledge and experience to insure any type of franchise business. We understand the unique liabilities and needs of franchises, and are here to help you find the best protection for your business. Our agents will work one-on-one with you to design a complete business insurance package to fit your unique coverage needs and obligations.

For more information on franchise business insurance, <a href="http://www.pigbcs.com/franchise-businesses-insurance/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=reading-your-franchise-disclosure-document-insurance-requirements-2704688" target="_blank" rel="nofollow">click here</a>.

Reading your Franchise Disclosure Document Insurance Requirements

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Understanding a franchise’s insurance requirements will help you make more informed decisions and ensure your investment is properly covered. 

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Reading your Franchise Disclosure Document Insurance Requirements

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