Why Franchisors Need a Verification Checklist
A $1.7 million general liability claim against a franchise system traced back to a $500,000 coverage gap - a franchisee with a $1 million GL policy when the franchise agreement required $2 million. The certificate on file showed general liability coverage, and someone had marked the franchisee as compliant. No one had compared the actual limit to the agreement requirement.
A systematic franchise insurance compliance checklist prevents this. It moves verification from a general impression ("looks like they have insurance") to a structured comparison of every required element against the franchise agreement.
This checklist covers every verification point that franchise compliance teams should apply to every franchisee COI submission.
Section 1: Pre-Verification Setup
Before reviewing a COI, confirm you have the right reference document.
- Identify the franchisee's specific franchise agreement (not the current template)
- Note the agreement execution date and any amendments
- Extract the insurance requirements section from the agreement
- Confirm which requirements apply to this franchisee (standard, modified, or territory-specific)
- Note any franchise system updates that have been applied to this franchisee's requirements via amendment
Why this matters: Requirements vary across agreement vintages. A franchisee who signed in 2018 may have a $1 million GL requirement while a 2023 franchisee requires $2 million. Checking either franchisee against the wrong standard produces a false result.
Section 2: Coverage Types - Completeness Check
Verify that every required coverage type is present on the submitted COI.
| Coverage Type | Required? | Present on COI? | Notes |
|---|---|---|---|
| Commercial General Liability | Yes - all franchisees | ||
| Workers' Compensation | Yes - if employees | ||
| Employer's Liability | Yes - if employees | ||
| Commercial Auto | Yes - if vehicles | ||
| Umbrella / Excess Liability | Per agreement | ||
| Property / Business Personal Property | Per agreement | ||
| Liquor Liability | If applicable | ||
| Professional Liability / E&O | If applicable | ||
| Cyber Liability | If required by system |
- All required coverage types are present
- No required coverage types are absent or omitted from the submission
Section 3: Coverage Limits Verification
For each coverage type present, verify that limits meet or exceed the franchise agreement minimums.
Commercial General Liability:
- Each occurrence limit ≥ franchise agreement minimum (commonly $1M or $2M)
- General aggregate limit ≥ franchise agreement minimum (commonly $2M or $4M)
- Products and completed operations aggregate ≥ requirement
- Personal and advertising injury limit ≥ requirement
Workers' Compensation / Employer's Liability:
- Statutory workers' compensation coverage confirmed
- Bodily injury per accident ≥ requirement (commonly $100,000 or $500,000)
- Bodily injury by disease - policy limit ≥ requirement
- Bodily injury by disease - per employee ≥ requirement
Commercial Auto:
- Combined single limit ≥ requirement (commonly $1M)
- Coverage applies to: owned, non-owned, and hired auto (confirm all three categories)
Umbrella / Excess Liability:
- Per occurrence limit ≥ franchise agreement requirement
- Aggregate limit ≥ franchise agreement requirement
- Confirm umbrella follows form over underlying coverages
Property:
- Coverage amount ≥ replacement cost value of insured property
- Business interruption / business income coverage confirmed if required
Section 4: Additional Insured Status
This is one of the most frequently deficient areas in franchise COI compliance. A COI listing the franchisor as additional insured does not guarantee the underlying policy is correctly endorsed.
- Franchisor's legal entity name appears as additional insured on the COI
- Additional insured status applies on a primary and non-contributory basis
- Confirm this language appears explicitly - not just "additional insured"
- Verify whether an endorsement number or form number is referenced (CG 20 10, CG 20 37, or equivalent)
- Confirm additional insured status applies to ongoing operations AND completed operations if required
- If the agreement requires the landlord or lender to also be named as additional insured, verify those entities appear
Red flags:
- "Additional insured as required by contract" without naming the specific entity
- No endorsement reference number
- "Additional insured" without "primary and non-contributory" language
- Certificate marked "per written contract" only - endorsement should be confirmed
Section 5: Waiver of Subrogation
- Waiver of subrogation in favor of the franchisor is confirmed on the COI
- Waiver applies to general liability policy
- Waiver applies to workers' compensation policy (if required)
- Waiver applies to commercial auto policy (if required)
Section 6: Named Insured Verification
A COI from the wrong entity - even if all limits are adequate - may not respond to a claim involving the franchisee.
- Named insured on the COI matches the legal entity name in the franchise agreement
- If the franchisee operates under a DBA, confirm the entity name (not just the DBA) is the named insured
- If the franchisee is a multi-unit operator, confirm the correct entity is listed for this location
- Mailing address on COI is consistent with the franchisee location
Section 7: Policy Period and Effective Dates
- Policy effective date is current (policy has not lapsed)
- Policy expiration date is confirmed and calendared for renewal follow-up
- No gaps in coverage from prior policy period to current policy
- If policy was recently renewed, confirm the renewal was with the same or equivalent carrier and coverage
Section 8: Cancellation Notice Requirements
- COI notes 30-day notice of cancellation to the franchisor (or as specified in the agreement)
- Franchisor's contact information for cancellation notice is correctly listed
- If the agreement requires 30 days' notice and the COI states 10 days, flag as deficient
Section 9: Endorsement Documentation
For compliance records that will withstand audit or litigation scrutiny, verify that endorsements are on file, not just indicated on the COI.
- Request actual endorsement copies for additional insured and waiver of subrogation
- Store endorsement copies with the COI in the compliance record
- Note endorsement form numbers in the compliance log
Section 10: Documentation and Filing
- COI is stored in the compliance system with the franchisee record
- Verification date and reviewer are logged
- All deficiencies are documented with specific notes on what is missing
- Deficiency notice is issued to franchisee within the compliance program's SLA
- Expiration date is entered in renewal tracking calendar (60-day and 30-day alerts)
Automating This Checklist
Manual application of this checklist to 50, 100, or 500 franchisees requires significant staff time and produces inconsistent results. An automated contract-to-COI comparison platform applies every item on this checklist automatically, anchored to the specific requirements in each franchisee's franchise agreement.
Bramble reads franchise agreements, extracts the requirements applicable to each franchisee, and compares every submitted COI against those requirements. Deficiencies are flagged at the field level - not as a binary pass/fail - with citations to the franchise agreement language that the submission does not satisfy.
The result is a compliance record built for audit and litigation defense, produced in a fraction of the time that manual review requires.