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Franchisors Professional Liability Insurance Coverage (E&O)
Franchisors Professional Liability(E&O) Insurance is a critical
coverage that every franchisor should have in their risk management portfolio.
As we face these challenging economic times and new trends in consumer spending
many Franchisors are finding that their business models need to fluctuate with
these times. With these fluctuation some franchisees see their profits
fall and turn to litigation against the Franchisor for many reasons and defense
for the claims falls under the Franchisors Professional Liability(E&O)
insurance. This is a very specialized coverage that requires that the
broker do more than just submit an application, within the Franchisors (E&O)
Professional Liability policy their are numerous points that can be negotiated
with the carrier and having a commercial insurance broker that understands these
clauses on your side will be to your advantage.
Every Franchisor is aware
of the impact that their FDD Statement(The Franchise Disclosure Document,
formerly the UFOC) has on their ability to recruit new investors and
franchisees, so when a lawsuit arises you want an insurance policy that has been
structured correctly to protect the Franchise Brand and the future ability for
the organization to grow with out unnecessary claims and settlements on the FDD
of the Corporation.
Potential Areas of risk in a Professional Liability Policy that are
specific to Franchisors:
Hammer Clause
Defense Outside/Inside the Limits
Additional SIR(Deductible) limitation from franchisee litigation
Vicarious Liability from the Franchisee Operations
Example of a claim under a Franchisors Professional Liability:
A nationally recognized franchisor had been selling franchises for 18 years and
had recently experienced very rapid expansion into 46 states. Fueled by
the new infusion the company expanded its footprint by selling territories to
"Master Franchisees". These territories were developed which fueled
further growth. The company had a strong education program in place for
the master franchisees to follow when selling new franchises but dispite this
program some promises of growth and revenue expectations were passed on to the
new franchise owners. When these expectation were not realized and the
franchisee failed they files suit against the Master Franchisee and the
Franchisor. Acting as an agent for the Franchisor the Master Franchisee
and the Franchisor were found at fault and the underlying Franchisor
Professional Liability policy respond in the amount of $450,000.
We have helped our clients construct professional liability policies
that help them grow their businesses with the piece of mind knowing they do not
have to fear their own franchisees. The biggest piece of understanding
which policy is the best fit for your organization starts when we sit down and
listen to you, our client and understand your business model and corporate
philosophy so we can best represent you in the insurance marketplace. Let
us know how we can help.
Contact a commercial insurance professional today.
All Forms of Professional Liability Insurance
We have access to coverage that encompasses ALL forms of liability insurance -
EPLI - Employment Practices Liability Insurance,
D&O - Directors and Officers,
E&O - Errors and Omissions insurance, and Group Personal Liability. Limits available up to $25,000,000. Worldwide coverage available. Products available in most states.
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We help our clients reduce expenses while maintaining or improving
their over all insurance coverage.
- Average Reduction in Premium 10-20%
- We work for you
- Reduce time managing insurance programs
- Identify Coverage gaps
- Risk analysis
Contact us
Commercial Insurance Broker for:
Why work with Arroyo Insurance Services:
- Arroyo has been in operation since 1986
- Choice - Over 35 A Rated Carriers
- Dedicated account manager
- 4 Hour turn around on certificates
- Loss prevention program
- Workers Comp Claims Management
- Personalized Risk Assessment
- 98% Client Retention rate
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