Mobile Based Franchising and Liability Insurance Issues in Franchising Agreements

Mobile Based Franchising and Liability Insurance Issues in Franchising Agreements

Mobile based franchising companies must consider the potential eventuality of being sued or named in a lawsuit, which is directed at a franchisee due to a traffic accident while conducting the franchise outlets business operations. In places like New York, California, Washington D.C. the number of lawsuits from traffic accidents are astounding. Without protection and separation from the franchise outlets, a franchisor might unnecessarily open themselves up for liability issues of one of their franchisees.

It is for this reason that in my franchising agreements are decided to spend special attention to the clauses regarding insurance, limits of liability and operations of vehicles in the franchise business. Below is a copy of the clause that I inserted into our franchise agreements;

3.21 Insurance

3.21.1 Limits of Liability

Prior to the commencement of any operations under this Agreement, Franchisee must maintain, at their sole expense, a business liability, comprehensive and completed operations insurance policy or policies in accordance with standards and specifications set forth in the Confidential Operations Manual, which must include at a minimum the following coverage:

(a) Comprehensive general liability insurance, in the amount 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, including comprehensive and collision;