Does my franchisor have to be an additional insured on my policy?
Almost certainly yes, because nearly every franchise agreement requires it, and it has to be done by endorsement rather than by writing their name on a certificate. The agreement will also set minimum limits, and usually asks for the franchisor’s affiliates, officers and directors to be covered alongside the company itself.
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Your current policy paperwork, a renewal notice, or nothing at all. A licensed agent reads it and replies the same business day.
The detail
The FTC Franchise Rule requires a franchisor to disclose, in Item 8 of the Franchise Disclosure Document, the obligations it imposes on franchisees to buy or lease from designated sources, which is where the required insurance schedule is set out.
The Franchise Disclosure Document is reissued and re-registered annually, so the schedule a franchisee signed under may differ from the one a new franchisee in the same system signs under this year.
What this means for you
- Read the schedule, not the summary. The insurance clause usually names limits, required coverages, who must be added and on what basis, and sometimes a rating requirement for the carrier. Every one of those is a separate thing your policy either does or does not do.
- Additional insured is an endorsement, not a line on a certificate. A certificate tells the franchisor what you bought. The endorsement is what actually gives them a defense under your policy. A franchisor compliance desk that accepts a certificate alone is not the same as a policy that would respond.
- The requirement usually reaches past the company itself. Affiliates, parent companies, officers and directors commonly appear in the same clause, which is what a blanket endorsement handles cleanly and a scheduled one handles one name at a time.
- Non-compliance is a breach of the agreement. That is the part franchisees underestimate. An uninsured risk is a risk; a missing endorsement is a default under the contract that gave you the brand, and it is discovered at renewal or at a claim.
- Do not buy the requirement twice. Some systems run a brand program that already includes parts of the schedule. Paying separately for something the program covers is common and quiet, and it only shows up when somebody reads both documents side by side.
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Related questions
- What limits will my franchise agreement ask for?
It varies by system and it changes, which is why no honest page will quote you a figure for your brand. What is consistent is the shape: a general liability limit per occurrence and in the aggregate, products and completed operations, usually liquor liability where alcohol is served, workers compensation at statutory limits, commercial auto where delivery happens, and often an umbrella sitting over them. Send us the agreement and we will match it line by line rather than guessing at it.
- What a franchise program has to cover
- The franchisor asked for a waiver of subrogation too. What is that?
It stops your insurer recovering from the franchisor after paying a claim you were both involved in. It is an endorsement like additional insured status, it is very commonly required alongside it, and it is one of the two things most often missing when a compliance desk rejects a certificate. Ask for both at the same time.
- Does adding the franchisor cost me more?
Often nothing. Many liability policies carry a blanket additional insured endorsement that grants the status automatically wherever a written contract requires it, and a franchise agreement is exactly that. Where there is no blanket, each party is scheduled individually and may carry a charge. Which of those you have is worth knowing before the compliance deadline rather than after.
- Certificate holder is not the same thing
- I run several units. Does that change anything?
It changes the structure more than the requirement. Multiple units under one entity usually belong on one program with the locations scheduled, which is cheaper and much easier to evidence than several standalone policies renewing on different dates. Where units sit in separate entities, the named insured schedule has to reflect that or a claim at one location can find the wrong policy.
- We are a restaurant franchise. What gets missed most?
Liquor liability where the system serves alcohol, because general liability excludes it by name, and hired and non-owned auto where there is any delivery, because a driver’s personal policy declines the moment the trip was for work. Both are commonly in the agreement’s schedule and commonly absent from the policy that was bought to satisfy it.
- What a restaurant program covers
Need this handled?
Reading about it and having it handled are different jobs, and the second one is ours. We place the accounts other brokers decline — claims history, a cancellation, an unusual operation, a business nobody wants to underwrite twice — and we will tell you when the policy you already have is the right one. Tell us the situation and a licensed human replies the same business day.
Written by the licensed brokers at Boring Insurance. Last updated 2026-09-23. See all guides.