Insurance for Franchises: What Kind of Insurance Do You Need?
There are different types of insurance to consider depending on whether you’re a franchisor or a franchisee. Franchise insurance requirements also depend on what business activities your franchise takes part in.
What Should Franchisors Consider?
Franchisors need to make sure they have insurance policies in place to protect the business from unforeseen circumstances within each franchise location.
Policies that protect franchisors include:
- Errors & Omissions Insurance
- Management Liability Insurance
- Employment Practices Liability Insurance
Franchisors need to outline what insurance is necessary for franchises depending on their business activities in their Franchise Disclosure Document (FDD).
What Should Franchisees Consider?
Some business activities have coverage under required franchise insurance policies, but some things get left out. Franchisees should investigate their policies to see what’s covered and where extra coverage needs to be put in place.
Types of Insurance You’ll Need to Consider
There are lots of business activities that franchisees take part in. Below we’ll name a few of the most common and offer insight on what type of insurance policy will help cover liabilities that come with those activities.
Bringing Clients in or Sending Employees Out
If a franchise invites customers in or sends employees out to interact with customers public liability insurance is important.
Public liability insurance will cover your business for the cost of claims that are made by a member of the public against your business activities.
No matter the franchise, there’s a chance of injured and ill employees. Workers’ compensation insurance will protect both the franchise and employees from injuries or illnesses because of the job.
Franchises that sell many physical products need to make sure they have protection from lawsuits arising from injuries inflected on customers due to product use.
With product liability insurance, franchisors can assure their business has protection from claims made suggesting their products inflected injury or property damage.
If a franchise owns or rents a property for its operations, it’s important to make sure policies are in place to pay for any damage to the property. Commercial property insurance can assure this coverage.
If vehicles are part of a franchise’s operations, commercial car insurance needs to be part of the policy.
Keep Track of Policies
It can be difficult for a franchise to decide which policies they need. On top of that, keeping track of multiple policies is a time-consuming process.
With SmartCompliance, franchises can upload and track the necessary Certificates of Insurance (COIs) for each of their policies assuring they are being used to their full extent. Get started today with a free demo to see how SmartCompliance will help your business.