Franchising is one of the most effective ways to grow a business and the constantly increasing number of franchises and franchise businesses in Australia demonstrates just how successful a business model franchising is.
Part of a successful strategy for both franchisors and franchisees is the ability to look ahead and identify potential risks and problems before they arise and put checks and balances in place to deal with them. This is where insurance comes in.
Having said that, there will always be unforeseen events which can completely derail even the best of business strategies.
Business insurance these days can seem complicated and the requirements for a business can vary from compulsory requirements to risk-based policies.
Here are FIVE types of franchise insurance policies that every franchise should consider:
Professional indemnity insurance is a form of liability insurance that can help protect franchises from services or products they provide from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.
Public and product liability insurance for franchises covers amounts your franchises becomes legally liable to pay as compensation for personal injury or property damage to third parties as a result of an occurrence in connection with your business.
Business Interruption Insurance
Business Interruption Insurance protects franchises from the loss of income that a business suffers due to a disaster while its facility/store/venue is being rebuilt. A property insurance policy only covers the physical damage to the business, while the additional coverage allotted by the business interruption policy covers the profits that would have been earned. This extra policy provision is applicable to all types of businesses, as it is designed to put a business in the same financial position it would have been in if no loss had occurred.
Distribution / Warehouse insurance
Distribution and Warehouse insurance protects franchises from the costs involved from the transportation or storage of goods and services.
Risk specific policies
Risk specific policies are Franchise dependent. Franchising is a very diverse industry and the insurance risk involved will vary according to the franchises needs.