Although franchise operations offer many advantages to franchisors and franchisees, like all businesses, franchises are subject to external and internal risks. This is why it is essential for both franchisors and franchisees to have necessary Business Insurance policies. Franchise operations in New Jersey are fortunate to have the services of Blue Lion Insurance Advisors, LLC available.
Whether you are the franchisor or the franchisee, our highly trained, talented advisors are well-prepared to help you obtain franchise insurance policies that are Blue Lion Strong™. Contact us now at (732) 649-1600 or online for exceptional customer service.
Why Blue Lion Insurance Advisors Are in Demand Throughout New Jersey
Our firm has a long history of guiding our clients to insurance policies that provide dependable, cost-effective coverage. As brokers, our advisors are not affiliated with any one provider, so our loyalty is only to our clients. We can offer a broad range of policies from competitive insurance companies to give you the best coverage at the best possible price.
Franchise Insurance Protects You When Things Go Wrong
In spite of the fact that franchisors profit by expanding their successful business model to new entrepreneurs in new locations, there is always the chance that the new venue will not succeed or will strain the reputation of the franchise at large.
Similarly, a new franchise has the advantage of using a successful business model and a recognizable brand but also runs the risk of being damaged by a mistake or failure of another unit of the franchise or by the management of the larger operation, as well as by its own mistakes. For these reasons, both franchisors and franchisees need several types of insurance.
Because the situation between the franchisor and franchisee is a complex one, it is important to work with one of our knowledgeable insurance advisors whichever role you play to determine which policies can provide the best coverage for your particular kind of franchise.
Types of Franchise Insurance Policies
Depending on the nature of the franchise, and the precise legal nature of the franchisor-franchisee relationship, there will be variations in what types of insurance policies you require. In any event, both the franchisor and franchisee must be covered. In most cases, the franchisor carries general liability insurance for the franchise and the franchisee is also required to list the franchisor as an additional third party on their insurance policy.
The franchisor is liable for the actions of the franchisee’s employees if the franchisee is an agent of the franchisor. However, the employee’s actions must be within the scope of employment, for the franchisor to have vicarious liability. In the long run, much depends on the way your particular franchise agreement is structured.
The basic policies that protect franchisors typically require include: Errors and Omissions Insurance, Management Liability Insurance, and Employment Practices Liability Insurance.
General Liability Insurance
Most franchise agreements require the franchisor to maintain a minimum of a few million dollars of General Liability Insurance to cover property damage, personal injury, advertising injury, and product liability. General Liability Insurance can cover the personal injury of a customer on the premises of the franchise. It should be noted, however, that if the cause of the injury was a specific item added by the franchisee (e.g. a rug or appliance not part of the franchise model), the franchisee alone may be held liable.
Property Insurance
Property Insurance covers your franchise for damages to property by fire, flood, and vandalism and is extremely important in keeping your franchise thriving even in the face of external, destructive forces.
Business Continuation Insurance
Business Continuation Insurance, aka Loss of Business Income Insurance, can prevent the extraordinary losses that may occur if your franchise has to be closed for repair or rebuilding after a weather disaster, environmental catastrophe, or structural accident. Such coverage enables the franchisee to pay for ongoing expenses (e.g. wages, equipment rentals) while your business is out of commission.
Franchisor Liability or Errors & Omissions Insurance policy
This policy covers the franchisor for alleged errors, omissions, or negligence that occur in the professional services it provides to its franchisees as stated in the Franchise Disclosure Document (FDD). In other words, this policy offers a backup when an error or omission on the part of the franchisor causes damage to the franchisee’s business.
Workers’ Compensation Insurance
This policy provides coverage for any employee of the franchise who is injured at the workplace or develops a work-related illness. This policy will cover the employee’s medical and rehabilitation costs in full and will offer the affected employee 70 percent of their average weekly wages for a maximum of 400 weeks.
Employment Practices Liability Insurance EPLI
A franchise owner may also opt for Employer’s Liability Insurance to cover any losses that result from an employee lawsuit that finds the franchisee liable for damages related to discrimination, a wage and hour dispute or wrongful termination, or for punitive damages in a personal injury lawsuit. In a world fraught with discrimination lawsuits, most franchise owners consider this policy essential.
Commercial Auto Liability Insurance
Many franchises use commercial delivery vehicles and therefore need Commercial Auto Liability Insurance for liability in case of traffic accidents to cover property damage, medical costs, and settlements of potential lawsuits. Contact us to find out the factors that may determine the rates of your Auto Liability Insurance.
Equipment Breakdown Insurance
This policy is critical since most franchises depend on machinery and industrial equipment for everyday productivity. By adding an Equipment Breakdown Insurance policy, franchise owners are able to cover any losses due to mechanical or electrical breakdown of various kinds of equipment, from printers to refrigerators.
Cyber Security Insurance
These days there is no franchise that does not use computers for all sorts of business matters, including storage of customer data, financial records, and merchandise orders. That’s why it is crucial for franchises to have Cyber Security Insurance to help them provide for financial recovery in case of data breaches, computer attacks, or cyber extortion.
Whether you are the franchisor or franchisee, our insurance advisors know precisely the right questions to ask to determine which Franchise Insurance policies you need to provide you with superior risk management and peace of mind.
Contact Our Experienced Insurance Advisors Today
Getting in touch with Blue Lion Insurance Advisors, LLC will help you become aware of the various risks to you whether you are the franchisor or franchisee, and to prepare an appropriate insurance portfolio. You can count on us to help you purchase insurance policies that fit your business needs. Contact us now and feel the confidence that comes from dealing with competent professionals.