NEW FEAR UNLOCKED:
FRANCHISOR JOINT EMPLOYER
LIABILITY
Franchisor joint employer liability is when Franchisors pay out of pocket for franchisees without sufficient coverage, personally from their own checking account.
Franchisors assume the key to preventing vicarious liability is tracking insurance certificates is the panacea or cure-all. Tracking franchisee COI’s does little to prevent poor coverage, proper limits, and proper policy details or significant unexpected exclusions, etc. Collecting current COI’s also doesn’t help franchisees get the coverage they need. This problem only compounds at scale. Monitoring insurance of more than 25 franchisees is real, even with software. Uninsured and under insured franchisees is a known blind spot. All franchise executives struggle with writing proper coverage, basic insurance knowledge, validating proper coverage, and monitoring coverage at scale year-round.
TRUTH #1
INSURANCE GAPS
Franchisees often find themselves under insured, uninsured, or have problematic exceptions that leave gaps in coverage. Without expertise, franchisees are left to fend for themselves against challenges they can be unaware of.
POOR COVERAGE
COI tracking software may confirm the policy is active and coverage is in place, but it doesn’t prevent poor coverage in the first place. Their are many policy details not included on the COI which can leave the Franchisor in jeopardy of being liable.
TRUTH #2
TRUTH #2
FRUITLESS EFFORTS
Franchisor’s aren’t insurance experts, nor do they have the time to invest in validating insurance 24 hours a day, 365 days a year. Franchisor’s want insurance off their plate. The software monitoring does little to alleviate the headache and the results are slim.
FDD REVIEW
A GUIDE FOR A TOP PERFORMING FRANCHISE OPERATOR
By reading our in-depth guide on Franchise Disclosure Document Review, you’ll uncover actionable steps to help your franchisees maintain compliance, prepare for audits, and protect their future. Don’t leave this critical component of franchising to chance—discover the key to building a resilient franchise system.
DO YOU HAVE THE RIGHT BROKER?
Creating a bulwark against vicarious liability is no easy task for the average brokerage or the Franchisor.
Local brokers and Top 10 Agencies often become overwhelmed as brands grow, change services, change leadership, change ownership, and constantly evolving as a business.
Pop Quiz
How often is your current broker offering the following?
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Optimizing FDD Coverage
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Reducing Premium Costs
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Mitigating Risk to Lower Claims
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Audit training and support
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Avoiding Costly Audits
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Planning for Deductibles
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Evaluating Risk-Sharing Programs
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Engaging in Regular Insurance Reviews
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Monitoring Compliance and Claims History
✔ Common Problem A: First-time business owners
Working with first time business owners is a prevalent challenge. New entrepreneurs are vital to growth, but with that comes other challenges that puzzle even the Top 10 brokers. The care, effort, teaching, and hand holding can quickly overwhelm a local agent.
✔ Common Problem B: Poor onboarding
Franchisee onboarding experience. Insurance is one of the first steps to starting a successful business. Lending support for a new group of franchisees is a challenge for even the best agencies in America. Often, it’s the smallest new businesses that require the most service and patience. This predicament can spell disaster for Franchisors looking for growth.
✔ Common Problem C: Poor partnerships
Franchisees can get in their own way by canceling coverage and shopping policies around. This works for holiday shopping, not for commercial business insurance. Franchisees treat agents and carriers like street vendors. Imagine ordering a pizza, and canceling because someone else offered to make you one for $3 less after eating 1/2 the pizza. Then, only to find out it was actually just a Lunchable™ from the other vendor. This happens all the time in insurance, and will leave the franchisee with fewer and fewer brokers and carriers willing to work with them. Partnerships matter, relationships matter.
President Five Star Bath
Dean Hartley
"The process has been seamless and it is a relief not having to deal with insurance as part of the onboarding process. Now I just tell them to call Rikor. "
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Operations Manager
The Brothers that Just Do Gutters
Brandon Ciaccio
"Partnering with Rikor has been an amazing experience! Recommending them to Franchisees to help procure proper insurances has been a huge help to our company. Not only have they worked with us to establish what insurances would be best for our industry, they have been able to help our new and existing franchisees get quality insurance at great pricing."
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DOOR #1
DO NOTHING FOR NOW
Stay with your current broker if you’re happy with your local brokers or Top 10 Agency, we suggest you stay where you are at. We honestly mean that, with no reservation or sarcasm.
Pop Quiz**:
Is your Agency already managing onboarding insurance for your new franchisees quickly and efficiently?
Is your Agency actively training and educating your franchisees on insurance basics?
Is your Agency providing software COI monitoring and reports?
Is your Agency handling consulting and insurance coaching to help franchisees make educated choices about their coverage?
**If you are happy with your answers, you must be happy with your Agency. We suggest that you retain them as your current broker.
DOOR #2
CHANGE IS IN THE AIR.
If you’re scratching your head thinking we should have a call with Rikor, the answer is, “Yes, we should.”
Brands grow, change services, change leadership, change ownership, and constantly evolve. Only an insurance brokerage designed for franchising can truly meet your niche requirements. Who else will review your yearly FDD and FA agreements to assess any insurance requirement updates? Have you? If no, then please, do set up a call.
INTERESTED IN PARTNERING?
BOOK A DISCOVERY CALL
Don’t book a call if the following is something your current broker is already doing. We don’t want to waste your time. These are critical activities for brand looking to reduce their exposure to vicarious liability, but it’s not for everyone.
How often is your current broker offering the following?
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FDD Insurance Requirements Evaluation + Comparison
Detailed Franchisee Insurance Insights + Suggestions
Offering Franchisor Insurance Consultations
An Understanding of Franchisee Insurance Requirements
Industry Classifications, including NAICS, SIC and NCCI
New Franchisee Risk Profile
Set clear franchisee upfront expenses (Item 7)
Updated FDD Insurance Clause (Item 8)
Establish annual cost range (Item 19)
PROTECTING THE RISK TAKERS FROM THE UNFORESEEABLETM
