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The Insurance Coverages You Need as a Franchise Owner

By Eastern Insurance, Sep. 10, 2017
The Insurance Coverages You Need as a Franchise Owner

The Insurance Coverages You Need as a Franchise Owner

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As a franchise owner, there’s no doubt you’re busy. Any business owner will tell you that running a successful business is more than a full-time job, but the added complexities presented to a franchise owner, such as multiple locations or corporate governances, can add to your already busy schedule. For these reasons, the Eastern Insurance Franchise Division is here for you. From donuts and coffee to specialty baking facilities and restaurants, our Franchise Division knows what it takes to insure franchise businesses of all industries and sizes.  


Below are just a few examples of the business coverages necessary for franchise owners, as prepared by Eastern Insurance’s Commercial Franchise Division.

General Liability Insurance
If you own brick and mortar franchise locations, you won’t be able to keep an eye on every customer that walks through your doors; or in the case of General Liability Insurance, every customer that trips over the threshold. General Liability Insurance protects your business from claims that occur while customers are on your premises. For example, if a customer were to trip and sprain their ankle in your location. It also covers “Bodily Injury to Others” and “Property Damage to Others” due to negligence by you or an employee.

Loss of Business Income Insurance
In a time of uncertainty, one thing is for certain – with insurance, you should plan for the worst and hope for the best. Most business owners associate Loss of Business Income Insurance with an event specific to their business, such as a fire in the kitchen, causing the business to close. However, even the most cautious business owner could potentially be out of business for an extended period of time in the event of a natural disaster. This coverage will give you the peace of mind that you, and the people your business supports, will be provided for in the event your business is closed due to an accident or event. For example, if you own a restaurant franchise and a fire in one of your locations puts you out of commission for three months, the policy will cover the net profit you would have made in those three months.

Workers’ Compensation Coverage
Regardless of industry, you’ll want to have Workers’ Compensation Coverage in place to help provide wage replacement and medical benefits to employees who are injured on the job. Workers’ Compensation also relinquishes the employee’s right to sue you for negligence.

In addition to having proper coverage, we recommend creating a safety manual and giving workplace safety instructions to all employees to prevent accidents and claims. The team at Eastern Benefits Group can help you navigate the tricky waters of employee benefits, OSHA, and other compliance issues.

Food Contamination Insurance
If you own a franchise that handles and serves food, contamination will be at the top of your list of issues to avoid. Foodborne illnesses, such as E. coli and salmonella, are easily transferred to food and kitchen surfaces during storage, preparation, and serving. The first step in preventing food spoilage and cross contamination is by properly training all of your employees on personal hygiene, cleaning, storage, and preparation processes.

Unfortunately, not all food contamination events can be prevented. If a health board shuts down your business due to a foodborne illness outbreak, like what happened with Chipotle this year and last year, this insurance coverage may help reimburse expense for covered items, such as the cost to replace the contaminated food, the required cleaning of equipment and facilities, loss of income due to a shutdown of the store or restaurant, and any medical tests for affected employees. 

Employment Practices Liability
Employment practices liability (EPL) insurance is a policy used to cover your risks due to some of the most common employment-related lawsuits, including the following:

  • Wrongful Termination: The discharge of an employee for invalid reasons
  • Discrimination: The denial of equal treatment to employees who are members of a protected class

  • Sexual Harassment: Subjecting an employee to unwelcome sexual advances, obscene or offensive remarks, or the failure to stop such behavior


EPL provides the necessary resources to defend your company against a lawsuit or to pay for a claim. As a franchise owner, you’re likely to be held responsible for several employees at different locations, and this coverage will help you should any issues arise.

Umbrella Policy
Think of an umbrella policy as an actual umbrella protecting you from the rain. This coverage does the same for your standard policies; it extends your business coverage so you have an additional level of protection in the event of large claims. For example, if your General Liability has a limit of $2 million, and you have a claim or lawsuit against you for $2.5 million, the umbrella policy can cover the extra $500,000. Don’t find yourself in a situation where you have to make up the difference, leaving your business liable.

Leveraging Eastern Insurance’s depth of resources and focus on service excellence, our experienced Franchise Division will work with you to ensure that your unique franchise business needs are covered. If you have questions and would like to talk to one of our Franchise Division team members, please call us at (800) 333-7234 or email us at We look forward to working with you soon.

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