Five Tips for Buying Insurance for Your Franchise Business

When Doug Groves first founded EZ CERT, he set out on a mission to fill a gap in the franchising industry’s certificate tracking systems. While franchise brands can’t be successful without local owners adhering to specific business models, Groves realized that it was becoming increasingly difficult for concepts to track their franchisees’ insurance compliance. So, he made EZ CERT the much-needed middle man. Instead of franchisors working with their franchisees to track every insurance certificate, EZ CERT’s team of insurance experts manage and maintain those connections.

As word of EZ CERT’s services started to spread, it became clear that demand for the company’s concept was at an all-time high. So, EZ CERT began to expand. And as more experienced professionals joined the company’s A-list team, it solidified itself as an indispensable industry supplier. That’s why the franchising community turns to both EZ CERT and Groves for answers when it comes to the industry’s most pressing insurance questions.

One of those questions is how to buy the best insurance for your franchise business. Franchisees are given a lot of options after signing their franchise agreement, and it can be difficult to know where to begin. To eliminate some of that stress and confusion, 1851 Franchise talked to Groves to uncover the five tips he recommends franchisees keep in mind when buying insurance for their businesses.

1. Work with an Independent Insurance Agency

There’s a lot to be said for working with an independent agent, such as EZ CERT’s affiliate Program Insurance Group. While some companies are tied to specific insurance carriers like State Farm or Farmers, independent agencies have the ability to review policies and programs across a variety of platforms. That means that companies like Program Insurance Group are able to bring more options to the table when determining the best course of action for their clients.

“It sounds simple, but I don’t think you can overstate the importance of working with an independent insurance agent. When we work on behalf of our clients, we’re truly trying to find the best coverage for them, regardless of who the provider is. We aren’t tied to one specific company, which is ultimately an advantage for the people we work with,” said Groves. “Working with an independent agency gives you a broader opinion and more options.”

2. Trade with an Agent Who Understands Your Business

Whether you’re building a franchise, investing in a franchise brand or are just starting out as an independent business owner, it’s critical to trade with an agent who understands your industry. Franchising is a complicated industry, so you want to be confident that your insurance agent is familiar with the rules and regulations that impact your bottom line. And that knowledge goes even deeper than the nuances of the franchising industry—each state and market also potentially comes with their own guidelines that both local owners and their insurance agents need to be aware of.

“It’s beneficial to be working with an agent who understands what you need. From what a franchisor requires to the specific guidelines in your market or state, there are a ton of things to keep in mind when picking the right insurance policies,” said Groves. “You wouldn’t want to do business in California, for example, with an insurance agent who isn’t licensed there.

Plus, the franchising industry is completely unique. There are a lot of regulations and documents—including Franchise Disclosure Documents—that providers need to be aware of. That’s why you want to work with someone who gets the ins and outs of your model.”

3. Review Your Policies Once Every Year

To ensure that your insurance policies are up to date, Groves advises thoroughly going through your coverage every year. By asking your agent what coverage you have as well as what coverages are available that aren’t currently included in your policy, both franchisors and franchisees have the opportunity to make any necessary adjustments in a timely manner.

“Sit down with your agent at least once a year and go through your current policy in addition to other coverage options that may be worth investing in. You want to reaffirm that you have the best possible coverage for your business while also confirming that you’re comfortable taking on certain risks yourself if you waive additional policies,” said Groves. “When it comes to insurance, everything comes at a cost.

The question is whether or not you’re willing to assume that risk—and ultimately cost—if something goes wrong. Take Houston, Texas—a lot of people who passed on flood insurance are now dealing with the fall out after Hurricane Harvey. That’s why it’s important to understand what your policies look like on an annual basis.

You want to be confident in your coverage.”

4. Pay Attention to Preferred Vendors and Agents

Building on the fact that it’s better to do business with people who understand and are involved in your concept, it’s also important to team up with vendors and agents—even beyond insurance—who are a brand’s preferred partner. Franchisors often establish relationships with certain providers to make the business ownership process easier for their franchisees. But that familiarity isn’t the only advantage that comes with relying on preferred vendors.

“As a franchisee, you definitely want to pay attention to the preferred vendors that your franchisor recommends. They’re preferred for a reason—odds are, they know what they’re doing or they offer a package that’s specifically tailored for your brand. There’s also a lot of power in buying from a preferred vendor as a franchisee.

Not only do you have your franchisor’s support in partnering with that vendor, but you also have the ability to provide feedback to your brand’s corporate team if something isn’t going right. And I can confidently say that a vendor is more likely to pay attention to a call or complaint that comes from a franchisor than it is to give special attention to a one-off client who reaches out,” said Groves. “This again speaks to the fact that it’s better to work with insurance agents who are familiar with your business.

That strong understanding goes a long way.”

5. Reconsider the Policies You Think You Don’t Need

Insurance is ultimately there to protect your business. That’s why it’s crucial to have extended coverage, even if you don’t think you need it. For example with the recent hurricanes—businesses that weren’t normally in flood zones are now scrambling to recover from the recent storms and hurricanes. And even though it isn’t necessary to have every type of coverage under the sun, it’s worth reconsidering the policies that you think you don’t need.

“Insurance isn’t important until you need it. You want to be confident that in the event of a crisis, your insurance agent will know exactly what to do,” Groves said. “Partner with an agent who wants to see you succeed.

In the event of a disaster like the flooding in Florida and Texas, you want to be sure that your agent is working hard to get you back in business as soon as possible. And part of what streamlines that process is having the right coverage to begin with, even if it may seem like a stretch that you’d need it in the first place. The right agent will protect your business from as much as possible.”