Franchise insurance is designed to protect both franchisees and franchisors from the various risks that come with operating a franchise. It’s important to understand why these types of coverage are necessary, and which policies are best suited to your business.

Below, we’ll provide an overview of franchise risk solutions, the types of insurance policies commonly available, and what coverage to consider for your franchise. Leveraging collective buying power can be key to putting the right insurance program in place.

There is no one-size-fits-all policy. Franchises span many industries, products, and services. As such, franchisors typically work with insurers to create programs tailored to specific business needs.

Here are some of the standard insurance policies commonly included in franchisor programs:

• General Liability Insurance (also known as business liability insurance)
  Covers claims related to bodily injury, property damage, reputational harm, and advertising injury. 
• Franchisor E&O Insurance (Errors and Omissions, also called franchisor liability insurance)
  Protects the franchisor from claims of negligence or failure to deliver services as stated in the franchise agreement. In Ontario, this can also include protection against rescission claims. 
• D&O Insurance (Directors and Officers)
  Covers directors, officers, and managers from claims arising from decisions or mistakes made while managing the business. 
• Property Insurance
  Covers the business’s building and equipment against damage or loss. 
• Commercial Auto Liability
  Covers damage to business-use vehicles and liability from accidents involving company cars, trucks, or vans. 
• Product Liability Insurance
  Protects the business against claims related to faulty or harmful products sold. 
• Cybersecurity Insurance 
  Covers losses related to data breaches, cyberattacks, and other digital threats. 

This list includes several common franchise insurance coverages but is not exhaustive. We recommend working with an insurance broker—like us—to help build a tailored insurance package that supports and protects your franchise business.