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Unleash the potential of franchise operations through innovative franchise insurance programs

Franchise operations have unique insurance protection and risk management needs.
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07/05/2024 · 4 minute read

Franchise operations have unique insurance protection and risk management needs. To make sure these needs are met, franchise owners face the challenge of ensuring that their franchisees are consistently and comprehensively covered. Implementing a franchise insurance program may help franchisors solve this issue in a way that is cost-effective, with minimal administrative burden.

Insurance challenges for franchisees

To effectively navigate the complex web of unforeseen risks and liabilities, it is important for franchisees to have insurance solutions that can provide robust protection. These solutions should meet the following criteria:

  • Franchisees have the appropriate insurance in place that meets the mandatory requirements outlined in their franchise agreement.
  • Franchisees' level of cover is commensurate with the activities they are undertaking.
  • The coverage is compliant with local insurance requirements and industry regulations.
  • There are effective monitoring and risk management tools in place to help avoid costly claims.

Ensuring the above standards are in place and continually monitored across your franchise network can be a time-consuming and costly task. Further, enforcing that franchisees find their own insurance solutions can place a strain on the franchisor-franchisee relationship.

From the franchisee’s perspective, arranging comprehensive insurance can take up valuable time and represent another overhead cost that has the potential to impact their profitability. There is also the risk that the franchisee will opt for the most affordable insurance they can find, which may not offer the level of coverage required by the franchise agreement. This scenario becomes more likely if the franchisee does not understand the finer details of different insurance policies.

As part of the franchisor’s overall value proposition, offering an insurance solution for franchisees will also help to add value and further develop the relationship between both parties.

Benefits of a structured franchise insurance program

Implementing a coordinated franchise insurance program can help franchisors overcome and address these challenges by streamlining the way insurance coverage is arranged across your franchise network. In so doing, franchisors can expect to benefit from:

  • Reduced risk of brand reputation damage by ensuring compliance and legal requirements are met across the franchise network.
  • Increased stability for franchises through actionable analytics and risk management insights for proactive loss prevention, shifting focus from reactive damage control to pre-emptive risk management.
  • Increased attractiveness and brand loyalty of the franchise by offering a stress-free insurance package to franchisees and enhancing the overall proposition.
  • Potential new revenue streams and more efficient use of funds that would have otherwise been put aside for uninsured losses.

Franchisees can expect to benefit from:

  • Access to insurance products and services that are not always available to smaller organizations, which can help make comprehensive insurance more cost-effective and in turn help to strengthen their financial footing.
  • Peace of mind knowing their insurance complies with the franchise agreement and other regulatory requirements.
  • Quick and simple purchasing options — online, by phone, or face-to-face and a simplified administration process.

Keys to success

For a franchise insurance program to be effective, having a detailed understanding of the franchise set-up, the nature of its business, geographies, regulations, and exposures is paramount. Further, it is important to consider how — as well as by whom — the program will be managed.

Picking the right partner for designing, placing, and managing your program helps mitigate risks and enhances your franchise business’s overall stability and value proposition, setting the stage for long-term success.

Learn more about our franchise insurance capabilities

With decades of experience and long-standing relationships with leading insurance carriers, Marsh’s Affinity Practice offers solutions to optimize your existing franchise insurance program or create a new one tailored to your franchise’s unique needs. Some advantages of our program include:

  • Committed program management: We assign a personal account manager dedicated to understanding your business and helping you to propel your program to greater success.
  • Personalized sales and service:  We develop tailored service strategies designed to meet the needs of both new and experienced franchisees, from setting-up a policy to supporting claims and managing renewals.
  • Rapid program adoption: We work with you to develop a bespoke marketing strategy, deploying omni-channel initiatives designed to foster insurance adoption, educate franchisees on how to mitigate risk, and help ensure consistent adherence to the program.
  • Analytics and insights: We provide you with access to data — spanning policy specifics, operational metrics, and marketing analytics — to help you improve program performance and the renewal process.

Whether you are a titan of the franchise world or an up-and-coming player, Marsh's Affinity Practice will work with you to develop an insurance program designed to protect your franchisees while aligning seamlessly with your strategic vision.

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