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Turning a successful business into a franchise is a great way to turn a good idea into a great company. But that success may also create the need for additional business insurance.
With the rise in lawsuits targeting chain businesses, insurers are now offering new types of business insurance for franchisers covering a variety of legal actions, reports Businessweek. This type of policy may cover everything from customer disputes with individual franchisees that turn into lawsuits against the owner of the franchise to employment disputes. And this is just the latest of many options for business owners when it comes to business insurance.
But the question remains: Should franchises purchase business insurance?
What is Business Insurance?
Business insurance is a catch-all for what is really a wide range of different types of insurance policies. These policies cover common problems that business owners may face, from slip and fall accidents in your business to injuries caused by a business' products. Business insurance can also cater to a business' particular needs. For example, for business owners constructing a new building, builder's risk insurance can cover buildings that are partially constructed. For business owners employing bonded employees, fidelity bonds can cover losses incurred by an employee's theft of business property.
For franchisers, additional insurance may be required for legal disputes with franchisees. These disputes may include disagreements over support provided by the franchisor to franchisee, the opening of another franchise nearby, or trouble regarding the terms of a franchise agreement.
Why You Need Business Insurance
Business owners may be tempted to save money by foregoing insurance. But while business owners may feel they can take other measures to protect against the potential losses typically covered by insurance, without insurance, an unexpected accident or unpreventable loss can happen at any time.
Rather than saving money by not being insured, franchisers can save money by prioritizing insurance needs and finding an insurance package and insurance provider that suits those needs.
Learn more about insurance for your business at FindLaw's Learn About the Law section on Business Liability and Insurance.
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Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.