Mobile based mostly franchising corporations should allow the potential contingency of being sued or named in a lawsuit, which is directed at a franchisee as a result of a visitors accident whereas conducting the franchise shops enterprise operations. In locations like New York, California, Washington D.C. the variety of lawsuits from visitors accidents are astounding. Without safety and separation from the franchise shops, a franchisor would possibly unnecessarily open themselves up for legal responsibility problems with sure one of their franchisees.
It is for that reason that in my franchising agreements are determined to spend particular consideration to the clauses concerning coverage, limits of legal responsibility and operations of autos inside the franchise enterprise. Below is a duplicate of the clause that I inserted into our franchise agreements;
3.21 Insurance
3.21.1 Limits of Liability
Prior to the graduation of any operations underneath this Agreement, Franchisee should preserve, at their sole expense, a enterprise legal responsibility, complete and accomplished operations coverage coverage or insurance policies in accordance with requirements and eyeglasses set forth inside the Confidential Operations Manual, which should embrace at a marginal the next protection:
(a) Comprehensive normal legal responsibility coverage, inside the measure of $100,000 bodily
harm per incidence and $50,000 property harm per incidence;
(b) Vehicle coverage inside the measure of $100,000 single restrict, together with
complete and collision;
(c) Worker's Compensation and Employer's legal responsibility coverage (if Franchisee
has workers); and
(d) Equipment coverage for the worth of all The Car Wash Guys tools.
If Franchisee cash in hand the tools, the lending establishment may in addition require Franchisee to keep up hearth/theft/complete coverage for the worth of that tools.
3.21.2 Additional Insured
Franchisor shall be named as an extra insured underneath all coverage insurance policies, as its pursuits could seem, and admit a release by the service of all subrogation rights towards Franchisor. Maintenance of coverage underneath this paragraph shall not relieve Franchisee of legal responsibility underneath the default commissariat set forth on this Agreement.
3.21.3 Other Requirements
Franchisor could, at its discretion, change the required protection and the boundaries of legal responsibility for Franchisee's coverage in the course of the period of time of this Agreement. Franchsior could require Franchisee to extend the marginal limits of protection to maintain tempo with common enterprise observe and heady coverage customized. In the occasion Franchisor does this, Franchisee could also be paying the next or decrease premium.
The coverage won't be restricted in any approach attributable any coverage Franchsior maintains. The coverage won't be topic to cancellation besides upon twenty (20) days' written discover to Franchsior. Certificates of Franchise's coverage insurance policies can be saved on deposit with Franchisor. Maintenance of the required coverage won't diminish Franchisees legal responsibility to Franchisor underneath the indemnities contained on this Agreement.
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If you run or function the cell franchise firm you could note of the coverage points and be sure you or furthermore insured to stop dangers to your medium of exchange well being as a franchisor. You might want to contact the franchise legal professional to ensure the clause in your contracts is up-to-date, considers all of the latest case regulation and is causative the jurisdiction of your franchise firm and the jurisdiction of the franchise shops the place you may be promoting these franchises. Make positive you get a franchise legal professional who's educated raw on this space. I hope you'll allow this in 2006.
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