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Unlocking Franchise Success: How franchisors can manage insurable risks and enhance franchisee value

In the dynamic world of franchising, where growth, profitability and risk management are critical, franchisors continually seek innovative ways to boost efficiency and drive franchisee success.

16/02/2024 · 3 minute read

In the dynamic world of franchising, where growth, profitability and risk management are critical, franchisors continually seek innovative ways to boost efficiency and drive franchisee success. While franchisors assist franchisees with key suppliers or products and services, they often overlook the opportunity to assist with insurance.

What if we told you that franchisors are in a unique position to not only protect their brand, but also enhance their franchisee relationships by offering a coordinated insurance solution?

Every franchisee, whether they’re running a quick-service restaurant, an automotive service center, or a real estate branch, faces the challenge of obtaining the right insurance coverage at the right price. Franchisors have access to world class risk management resources, which offer extensive data on franchise risks and can leverage market relationships with insurers. Franchisees, on the other hand, have historically tended to rely on their local agents who may or may not have industry expertise or market access to best support the franchisee. Additionally, these local agents are rarely focused on protecting the franchisor.

Collaborating with the right partner, such as Marsh, can lead to holistic, tailored insurance solutions that ensure optimal coverage for franchisees at cost-effective rates. This not only delivers peace of mind to the franchisor — it also can enhance their relationship with franchisees.

Access to sophisticated insurance solutions

Franchisee financial performance can be influenced by many variables. Unforeseen losses to people and property can threaten the feasibility and solvency of the franchisee.

The insurance related challenges facing your franchisees stress their financial performance and distract them from serving their customers. As an example, Marsh’s 2022 Restaurant Benchmarking and Loss Trend Report shows that quick-service restaurants have recently experienced high loss rate trends, as much as +52% for workers’ compensation and as much as +23% for general liability. Similarly, for businesses with fleets of 20-40 vehicles, average auto accident costs have increased +23%. Adverse loss rate trends like these tend to drive higher insurance costs. And, those franchisees in geographies impacted by wind, quake and other natural events are having further difficulty acquiring the proper coverage.

Advantages of a franchisee insurance program

While many franchisors have well-designed corporate insurance programs, franchisees have specific needs that are best met by a specialised approach. Deploying a Marsh Franchisee Insurance Program has numerous advantages, including:

  • Closing coverage gaps: Improved stability of coverage and mitigation of risks ensure the uninterrupted operation of franchisees.
  • Affordability through program design: Scale and sophisticated products only available to larger organisations make insurance more affordable for franchisees, strengthening their financial footing.
  • Brand and reputation protection: Safeguarding the brand’s reputation value, aligning to the long-term success and growth of the franchise.
  • Streamlined transactions: Simplified processes make obtaining coverage hassle-free for franchisees, allowing them to focus on running their businesses effectively.
  • Compliance assurance: Meeting franchise requirements and other insurance regulations become seamless, with proof of coverage and minimum limits maintained.

Marsh: The franchisee insurance solutions partner a you need

As the world’s leading insurance broker and risk advisor, Marsh specialises in crafting top-tier risk solutions for every industry. With a commitment to protecting and promoting possibility, Marsh brings unique experience to the franchisor-franchisee relationship.

Whether you’re a global franchise giant or an emerging player, Marsh offers the insurance products, technology, and service necessary to safeguard franchisees and align with franchisors’ strategic visions. By tapping into Marsh’s wealth of knowledge and experience, franchisors can elevate their support for franchisees by offering specialised insurance solutions, focused on franchisee prosperity and fostering mutually beneficial relationships.

Learn more about our franchise insurance solutions.

The seasoned advisory and consulting professionals on the Marsh Franchise Affinity team can help you elevate your franchisor-franchisee relationship with a unique franchisee insurance program.

Learn more

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