(A) On or before commencement of franchise operations, the grantee shall obtain policies of liability, Workers' Compensation and property insurance from appropriately qualified insurance companies.
(B) The policy of liability insurance shall:
(1) Be issued to grantee and name grantor, its officers, agents and employees as additional insureds;
(2) Indemnify for all liability for personal and bodily injury, death and damage to property arising from activities conducted and premises used pursuant to this chapter by providing coverage therefor, including but not limited to:
(a) Negligent acts or omissions of grantee, and its agents, servants and employees, committed in the conduct of franchise operations, and/or
(b) Use of motor vehicles;
(3) Provide a combined single limit for comprehensive general liability and comprehensive automobile liability insurance in the amount provided for in the franchise agreement. Such insurance policy shall be subject to review by grantor's legal counsel; and
(4) Be noncancellable without 30 days prior written notice thereof directed to grantor.
(C) The policy of Workers' Compensation Insurance shall comply with the laws of the State of California.
(D) The policy of property insurance shall provide fire insurance with extended coverage on the franchise property used by grantee in the conduct of franchise operations in an amount adequate to enable grantee to resume franchise operations following the occurrence of any risk covered by this insurance.
(E) Grantee shall file with grantor prior to commencement of franchise operations a certificate of insurance for each of the required policies executed by the company issuing the policy or by a broker authorized to issue such a certificate, certifying that the policy is in force and providing the following information with respect to said policy:
(1) The policy number;
(2) The date upon which the policy will become effective and the date upon which it will expire;
(3) The names of the named insureds and any additional insured required by the franchise agreement;
(4) The subject of the insurance;
(5) The type of coverage provided by the insurance; and
(6) The amount or limit of coverage provided by the insurance.
If the certificate of insurance does not provide all of the above information, grantor reserves the right to inspect the relevant insurance policies.
(F) Conduct of franchise operations shall not commence until grantee has complied with the aforementioned provisions of this section.
(G) In the event grantee fails to maintain any of the above-described policies in full force and effect, grantor shall, upon 48 hours notice to grantee, have the right to procure the required insurance and recover the cost thereof from grantee. Grantor shall also have the right to suspend the franchise during any period that grantee fails to maintain said policies in full force and effect. In order to account for increases in consumer prices, no more than once during any five year period, grantor shall have the right to order grantee to increase the amounts of the insurance provided in the franchise agreement. Such order may be made by grantor after conducting a duly noticed public hearing, in which grantee has an opportunity to comment. Grantee's decision shall be based on written findings. Increases in insurance coverage shall be based upon current prudent business practices of like enterprises involving the same or similar risks.
(Ord. 912, passed 6-8-00)