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Offering Private Label Insurance Programs

Private label insurance programs provide value, protection and peace of mind for franchisors and their franchisees.

Although insurance solutions may not be top of mind for most franchisors, many brands are reconsidering competitive and comprehensive programs for their franchise systems. They are ensuring their business partners have access to needed and required insurance coverage. The franchise model is based on a turnkey solution, so why not make that model complete by incorporating a private label insurance program?

Private Label Insurance Programs

The intrinsic value of creating a private label insurance program is not complicated or expensive to achieve. The reality is, it’s simple and it costs you nothing. Many carriers will work directly with you in developing and managing a relationship-driven insurance program. Benetrends has a team in place to build customized coverage tailored specifically for your operations. Having a sound program will bring advantages to the affinity of the brand such as a stronger culture of trust, communication and security, which elevates your quality reputation among your franchisees and affiliates.

Private label insurance programs have always been a safeguard for franchise systems by mitigating those exposures that cause insurance premiums to increase. These programs have enhanced franchisors’ errors and omissions, federal disclosure document compliance and overall risk management strategies. Private label insurance programs will continue to evolve with the changing landscapes in the property/casualty insurance arenas.

Unfortunately there have been too many franchisees with wrong or inadequate insurance coverage, exposing the franchisor to vicarious liability claims. Improper coverage is an issue that can be remedied with the correct private label insurance program.

Overall Solution

The tailored franchise insurance policy will provide insurance for covered claims that allege the franchisor has committed an error or omission toward the franchisee.
Some examples of franchisors’ errors and omissions coverage include:

  • Renewal or termination of a franchise agreement,
  • Provision of services, training, advertising or other support to a franchisee in accordance with the terms of a franchise agreement and or the disclosure document,
  • Preparation, amendment, renewal or registration of a franchise disclosure document prescribed by the North American Securities Administrators’ Association,
  • Written offering circular pursuant to, and in accordance with, the Federal Trade Commission Trade Regulation Rule on Franchises and Business Opportunities Ventures or any similar provision of any state statue of regulation,
  • Development or monitoring of compliance standards, specifications and or operating procedures for franchise owners,
  • Site selection or approval of a proposed franchise location or site selection of a franchisor-owned and operated store or office,
  • Negotiation or approval of a lease for a franchise location, and,
  • Sale, transfer or assignment of a franchise, the assets thereof and or a franchise agreement.

Every successful franchise insurance program starts with the franchisor. When a franchisor customizes an insurance plan, there is less of a risk to insurance carriers.

Benefits

What benefits does this program offer to a franchisor? When it comes to the benefits of a customized private label insurance program, it is the proper underwriting and protection that assures comprehensive coverage is in place. Your business then in turn gains leverage with large insurance carriers due to economies of scale and your voice will be heard collectively. When carriers see a comprehensive program like this in place, it lowers the risk and premiums for franchisor and franchisee alike. Your brand is also eligible for exclusive financial benefits that can be allocated across your franchise for varying purposes.

Risk

Your job as franchisor is certainly rewarding, but absolutely not without risk. Most franchisors understand that your franchise system is consistently exposed to risk. In addition to your operational risk, franchisors realize that depending on franchisees to deliver their services, their products and their brand to the marketplace would present risks not faced by other businesses. At any point in the process, one overlooked detail or misjudgment could trigger an expensive lawsuit from an unhappy franchisee.

Risk exposures and policy needs can vary by region, volume and operations.

Risk exposures and policy needs can vary by region, volume and operations. An agent can select the best fit from a diverse group of insurance carriers at the best price for the franchise owner. That’s why it’s important for franchisors to seek out providers who specialize in the unique insurance needs of their franchise systems.

Private label insurance programs provide value, protection and peace of mind for franchisors and their franchisees.

Sue Seal is senior director of insurance and risk management for Benetrends, Inc. She can be reached at 267-498-0063 or sseal@benetrends.com.

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