Strategic Planning

Insurance Requirements in Franchised Companies

Franchised companies often require what some believe to be excessive insurance requirements. This is because so often if a franchise is sued for any reason that the Lawyers go after the big money of the franchisors and name them in the lawsuit. It is amazing that a lawyer can write garbage in a lawsuit and file it in court and if you do not hire another lawyer to fight them, you could lose your entire life's work and company. But our legal system as most entrepreneurs agree is a complete joke and more closely represents the extortion tactics of the mob than any legitimate sense of fairness or truth. This is why franchisors must require huge limits of liability insurance and additional insured certificates as part of the franchise agreement.

It behooves a franchisor to set aside a place in the Official and Confidential Operations Manual to explain to franchisees why these requirements are in place. Franchisees are put at a disadvantage to other businesses in the market place due to the high costs of liability insurance required. But due to the lawsuits and lawyers it is imperative that these insurance policies are in place. When writing a chapter on required insurance for franchisees of a franchise system you will need to cover many sub topics. Below is an outline of our Insurance Requirements Chapter for our Franchise Company; , feel free to print this article and outline and then modify it somewhat to fit your business model. Once this is done put a few paragraphs to each number and lettered item and then review it. Type it up double-spaced and have an attorney look it over and share it with your insurance agent and have their underwriters look it over for accuracy. Then once completed add it to your Confidential Operations Manual to prevent discontent from your franchisees. Think on this.



A. Liability Exposure

B. Marketing

C. Franchisor Help

D. Peace Of Mind


A. Industrial Customers

B. Property Management

C. Large Corporations

D. Franchisor

E. Government Accounts


A. What It Doesn't Cover

B. Reasons


A. Liability Completed Operations

B. Vehicle

C. Worker's Compensation

D. Theft, Etc.


"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance;

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