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California Franchise Laws and the Importance of Having Franchise Insurance

Apr 24, 2008
When franchising was first introduced in America, it was decried by many as a scam. Why would anyone pay a monthly franchise fee and agree to purchase supplies from the franchisor without the ability to shop around for better pricing? Why not just open up your own shop where you have the freedom to run your business as you please?

Fortunately for franchise owners everywhere the FTC, rather than making franchising illegal, simply setup important franchising laws to regulate it. In addition to these federal laws, franchise laws (and franchise insurance types and rates) vary state to state. Today, a new business startup with one of the highest rates of success is the purchase of a fast-food restaurant franchise.

Today, franchises in America employee over 8 million people and account for about $1 trillion in annual income.

However, not all things are rosy in the franchising business. For example, some franchisors have a habit of heavily weighing franchise agreements in their favor, often making it very difficult for the franchisee to become successful. Another major issue that arises is the liability that comes with owning a business.

In and Outs of Franchise Insurance

Once you purchase a franchise, you become a business owner. You are now responsible for the well being of your customers who visit your business. Whether it's a laundromat, dry cleaners, or fast food restaurant, insurance to cover you against any mishaps is an important part of protecting yourself as well as your investment in your new business.

A trendy California beauty salon should consider insurance to prevent against upset customers who may decide to sue for what they consider to be bad work on their hair. History is full of consumers suing beauty salons for "ruining" the hair of a model or causing rashes to break out on the skin of a struggling actress.

And you undoubtedly remember the story of the judge that attempted to sue a dry cleaner for millions of dollars after accusing the business of losing a pair of his pants. Florida's dry cleaners insurance undoubtedly went up after that, while California's insurance industry was sure to have been watching very closely.

Like Florida, California's coast is home to many wealthy people, which has attracted "extreme" service businesses that cater to the healthy lifestyle and service expectations of those who can afford it. Along with it are customers that displease much easier and have both the money and the power to file what might normally be considered a frivolous lawsuit.

In addition, being home to many struggling actors and models waiting for their big break, California business insurance rates are going to cost a bit more due to the higher risk that a business will be sued.

If you are considering purchasing a California franchise, insurance for that business is going to vary widely based on both the coverage and level of service. When it comes to California, insurance for a franchise business is not something you want to skimp on. Play it safe by going with a well established insurance company and getting an appropriate level of coverage.
About the Author
All Franchise Insurance (http://www.allfranchiseinsurance.com) is a repository of companies offering insurance for franchise businesses in all states across the U.S. The author, Art Gib, is a freelance writer.
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