Each business has specific insurance cover requirements, and even though they are part of a ‘group’, franchised enterprises are no different. Becoming a franchisee is not the same as working as an employee; franchisees might use the systems and methods of their franchisors, but they are still responsible for running their own businesses and carrying their own franchise business insurance cover.
But with all the activities involved in entering into a franchise, it could be easy for a brand new franchisee to put insurance on the backburner, or maybe even to think that the franchisor has it covered. By endorsing a managed insurance program specific to their business, franchisors can save new franchisees time and money, and assist them in making sure they have the right types and level of cover.
What types of cover are required?
Compulsory insurance types include public liability, and workers’ compensation where the franchised business has its own employees. There are also many types of cover that may be highly recommended, such as:
- Fire and perils – cover for physical property for named perils.
- Business interruption – cover for lost revenue and ongoing and additional costs incurred when a business is unable to operate for a time due to an unforeseen event.
- Money cover – such as cash and cheques held on the premises, or in-transit.
- Machinery breakdown – covers sudden and unforseen physical damage to machinery which requires immediate repair or replacement to allow continuation of the business. ( Subject, of course, to the terms and conditions of the insurance policy)
- Stock deterioration – for example, food spoilage following a machinery B/D claim.
- Glass breakage – cover for replacement of broken or damaged glass such as counters and windows.
- Burglary – covers loss of equipment or stock due to burglary.
- Employee dishonesty – such as theft of money or property by an employee.
- Goods and stock cover – for mobile businesses while out on the road.
- Professional Indemnity – for advisory businesses, in case of harm caused by advice given.
- Other types of cover – such as personal accident, sickness, and motor vehicle insurance for business cars, vans or trucks.
Finding the right insurance to cover franchise risks
A new franchisee may be unlikely to know where to obtain the most appropriate and cost-effective types of cover for their enterprise. This is where a managed program comes in. Under a program of this type, the insurance cover has already been negotiated by the franchisor to suit the particular franchise in question, and the new franchisee only needs to join the program to be assured of adequate coverage.
Advantages of managed program insurance cover
There are a number of benefits to endorsed franchise insurance, including:
- Simplified, customised insurance solutions that provide the right types of cover for the risks pertaining to the particular franchise.
- Benefits of wholesale / bulk insurance purchasing – such as lower cost premiums for all members.
- Assurance that all compliance is covered for the franchisor in respect of franchisee insurance.
- Greater efficiency and speed when it comes to the claims process.
- Uniformity of cover throughout the whole franchise, rather than separate insurance policies that need to be tracked by the franchisor.
NFIB group managed program advantages
When franchisees come on board with an endorsed program at NFIB, franchisors can be assured that they are appropriately covered, and that their compliance requirements are being met.
There is also no need for the new franchisee to complete multiple complex forms or visit the insurer’s office or wait for approval. Instead, they only need to complete a four-step process at a dedicated virtual hub.
With NFIB’s programs, each franchise group has its own dedicated account executive, which results in greater efficiency and time saving, especially when it comes to lodging claims. And speaking of claims, the 24-hour portal provided means that claims can be lodged at any time without delay.
As a franchisor, you can benefit from an endorsed franchise business insurance program in multiple ways. You can be assured that your compliance requirements are being met, that you have the ability to tailor your group’s insurance according to risk level, and that you can track the insurance activities of your franchised members. Having a simple, streamlined process of obtaining insurance and making claims is also likely to be a selling point when it comes to attracting franchisees to your business.