There are two common paths for those interested in the restaurant business. The first is to create a new restaurant from scratch, and the second is to become a franchise restaurant owner. In a franchised restaurant, franchisees must maintain brand standards, and insurance is critical to safeguarding the brand. Through RMS Hospitality, you can offer comprehensive insurance options to restaurant franchisees.
There are approximately 792,000 U.S. franchise establishments that contribute $827 billion to the economy. For those interested in the restaurant industry, franchises can be an excellent opportunity to open a turnkey business that may generate profit faster than an independently owned restaurant. Owners benefit from the brand recognition and marketing support provided by the company.
While franchisees may have support that other restaurant owners don't have, the franchise is still a significant investment with relatively low margins. Most cannot afford the extensive legal fees associated with lawsuits. RMS Hospitality offers insurance designed to protect the franchisee.
Additionally, franchisors often have insurance requirements written into the franchise agreement. The franchisee must have minimum coverage and may also have to name the franchisor as an additional insured.
Franchise owners have to meet the needs of their franchisor, employees, and customers. When they're pulled in so many directions, insurance is a safety net.
General liability protects the owner and parent company from claims of injuries on the premises. While franchise companies may have general liability policies, they do not always cover franchise owners.
If the restaurant serves alcohol, liquor liability protects the business if an intoxicated customer causes bodily injury or property damage after the restaurant serves him or her alcohol.
Workers' compensation is an essential coverage for all business owners. It helps cover the lost wages and medical bills for injured employees.
Excess liability is a supplemental policy that goes beyond basic liability coverage limits.
Business interruption or income insurance from RMS Hospitality covers events outside the owner's control. For instance, natural disasters, government shutdowns, and fires can temporarily force a business to close. Business income insurance covers expenses in the meantime.
Franchisees are separate legal entities from the franchisor. In most cases, only in matters where the franchisor has a high degree of control will the franchisor have to worry about liability.
Without enough coverage, litigation can financially devastate a restaurant. Likewise, many franchisors will request a personal guarantee from the franchisees. This agreement requires the franchisee to back the financial and contractual obligations with personal assets.
Franchise owners must implement a comprehensive insurance strategy to protect their businesses. The more integrated risk management becomes with daily operations, the less likely the franchise is to encounter accidents and the more likely it is to foster a culture of safety and responsibility.
Working with RMS Hospitality can ensure you offer tailored coverages to restaurant franchisees with no blind spots. Contact us today to learn more about our insurance options.
At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom tailored solutions to meet any venue's specific needs. For more information, contact our knowledgeable experts today at (888) 359-8390.
At RMS and associated firms, business continues as usual. Our staff is remote-capable and available to handle all partners, brokers, and insureds at the present time.
