Opening a franchise can be very profitable, but these profits don’t come without risks. As a franchisee, you want to make sure you run your business according to the franchisor’s business model. One minor mishap may allow the franchisor to suffer from financial, reputable, and license losses.
As a franchisee, you’re agreeing to take responsibility for acquiring the proper insurance requirements of the franchisor’s demands to avoid significant losses. It is vital as a business owner to look at different insurance programs, insurance brokers, and insurance premiums that best meet the business operation needs.
Working closely with an insurance professional can guarantee you will be covered in all your franchising needs.
How Does Franchise Insurance Work?
When looking to protect your franchise and your employees, you first want to make sure you research the best insurance coverage out there. Once you find an insurer that best fits your business needs, you will pay them a monthly premium.
Depending on your franchise business, there are certain liabilities you need to be aware of. Some can include property damage, personal injury, product liability, or business interruption for financial losses. If any were to happen, your insurance company would be able to cover these incidents, of course, depending on your policy limit and what your insurance covers.
Types of Franchise Insurance
A franchisor will generally outline the proper insurance necessary in your Franchise Disclosure Document (FDD) as a franchisee. It is up to you, the franchise owner, to ensure there aren’t other liabilities outside of the document that needs to be covered depending on the employment practices.
Here are a few insurance policies that franchisees should carry.
When becoming a franchise owner, the first thing to consider is ensuring your property building is fully secured and protected. Having property insurance can help you protect yourself from any incidents like fire, smoke, vandalism, and anything that may occur damage to your business property.
Public Liability Insurance
If your franchise business has customers coming in and out daily and employees are constantly interacting with customers, Public Liability Insurance is necessary.
Public Liability Insurance protects business owners and their assets, property damage that has occurred from a customer. This policy helps protect your business from any legal action or compensation claims made against your business.
Product Liability Insurance
Protecting your inventory is something you always want to secure. If you do not have inventory, you aren’t generating any type of business. Having Product Liability Insurance can help from any possible lawsuits that can cause bodily injuries from faulty products.
General Liability Insurance
General Liability Insurance is the one policy every business owner should have. As a franchisee, this policy will protect you and the franchisor from any incidents. It is important to review your franchisee documents thoroughly to make sure you have the proper setup.
If a customer comes in and trips over a flower pot, that would be a cosmetic addition to the business that the franchisor may not require so that the franchisee will be at fault.
No matter the type of franchise you decide to open, the safety of your employees is always first. You signed up to take responsibility for a business and employees. With any business, there are always risks that can happen and eventually hurt someone.
Workers’ compensation can help protect the franchise and the employee from any injuries or illnesses that occur in the workplace.
If your business were ever facing a lawsuit, Professional Liability Insurance would help cover any legal fees that the company may face.
Commercial Auto Insurance
Depending on your business, especially the food franchise industry that provides deliveries services, auto insurance is also important. If your franchise requires commercial vehicles, it is important to add commercial insurance. Auto liability is very important when sending out your employees to do a job.
What Franchises Need Franchise Insurance?
The majority of call franchise owners should consider getting franchise insurance. To make sure all your business operations run smoothly, having insurance coverage can help protect you and your business.
It’s always best to add general liability insurance, public liability insurance, and auto insurance to avoid any business interruptions.
Why Do Franchises need Franchise Insurance?
We protect our valuables like health insurance, life insurance, auto insurance; it is necessary to get business insurance for your franchise. It’s best to analyze risk management before the situation gets worse. Protecting your employees, inventory, and property are all necessary reasons to get the best insurance coverage you can to avoid business interruption.
It’s always necessary to have the proper insurance requirements that the franchisor asks for to avoid losses to the business.
Avoid losses from your business and select the best insurance policies to protect your employees and business.