Insurance has become part of life, whether personal or secular, and franchise operators with locations in high risk areas certainly know the value of having a reliable insurance provider. By assessing the risks of your particular franchise and considering how insurance could make a cost-effective investment, future unanticipated expenses and resulting challenges can be thwarted.
Consider some of the following aspects of insuring your franchise:
- Franchise Disclosure Documents include sections in which franchisees are made aware of what their insurance obligations are before signing any agreements. Franchisees do well to research these obligations as well as any recommended insurance companies or agents. Where possible or pragmatic, consider what alternative options may exist in terms of insurance providers and talk openly with your franchisor regarding insurance requirements and your needs or wishes.
- Consider what insurance needs will arise after hiring employees and evaluate compulsory insurance coverage requirements to become well versed in what they mean for your franchise (worker’s compensation, liability, disability). Again, consider what options exist in terms of insurance and talk openly with your franchisor, as well as existing or fellow franchisees.
- Become familiar with what may pose risks in terms of interruptions to your business operations, those unknowns that could force you to close your doors. Talk to your franchisor about business interruptions and how these matters are typically handled by outstanding existing franchisees. Talk to other existing franchisees to find out more about how to best handle the unknowns of potential business interruption. This aspect of insurance may be particularly important for franchisees who do not have an adequate alternative income source to fund their expenses and who rely fully or at least a great deal on profits from their franchise operation.
- Take time to consider and list what circumstances could arise in the future of your franchise operation that would prevent your location from conducting business, and make a plan to cover these periods to the best of your ability. Aim to prepare insurance coverage matters before disasters strike and be as thorough in your considerations as possible, while remaining within reason.
Insurance exists to cover businesses and aspects of running a business where damages, liabilities, and profit loss can occur. As business, along with the rest of life, can be unpredictable and even random occurrences can affect operations, franchisees are encouraged to speak openly with their franchisor about insurance options, needs, and to discuss insurance matters with other franchisees. Experienced veteran franchisees and those in the same local area may be able to offer valuable insight on the kinds of insurance that prove or have proven beneficial, as well as shed light on potential situations that could warrant insurance coverage for your particular franchise concept.