Business Insurance

Let our team review your current public liability and indemnity covers as well as all your other business and trade-related insurances.

Tim, our lead expert will probably, pleasantly surprise you with what he can achieve.

Client Example:
N&F were paying $4450 plus GST per annum to insure one commercial vehicle comprehensively and one with third party only.

Due to the costs, they had no other business covers in spite of the potential downside to them.

Following Tim’s expert advice they would up with full Public Liability, $30,000 tools, four comprehensively insured vehicles and a host of other covers for $4400 plus GST per annum.

That’s right… more cover for less premium.
And with a top insurance company.

Shareholder Protection & Buyout Insurance

“"What happens when a Business Owner dies, becomes disabled, or suffers a major health trauma?"”

Buy out the deceased/disabled owner's interest

The problems here are:

  • Determining the price.
  • Raising the money.
  • Agreeing on terms of payment.
  • Strained negotiations and legal delays may make it difficult to reach a mutually acceptable position.
  • If there are no other buyers, the parties may feel that they are paying too much or receiving too little respectively.
  • What will happen if the deceased/disabled owner has given a Personal Guarantee to support a business loan?

Take the deceased/disabled owner’s representatives into the business

The problems here are:

  • Will they support or oppose the decisions of the remaining shareholders?
  • Will they want to change dividend policy or existing remuneration?
  • Will they be qualified to assume their share of business responsibilities?
  • What if some are minors represented by a guardian?
  • Do they have the resources and willingness to support the business if additional capital is required?

Sell the interest to the deceased/disabled owner’s representatives

This will not be a practical option unless:

  • They are qualified to operate the business.
  • The remaining owners are willing to sell and either retire from the business or remain as employees.

Additionally, there are still the problems of:

  • Determining the price.
  • Raising the money.
  • Agreeing with the terms of payment.
  • Supporting business debt with personal guarantees and assets.

Take outsiders into the business to purchase the deceased/disabled owner’s interest

The problems here are:

  • Outsiders may not be interested, particularly if it is a minority interest.
  • Will they want to change dividend policy or existing remuneration
  • Will they be qualified to assume their share of business responsibilities
  • Do they have the resources and willingness to support the business if additional capital is required

Additionally, there are still the problems of:

  • Determining the price
  • Raising the money
  • Agreeing on the terms of payment

Liquidate the business or sell to a third party

The problems here are:

  • Will the remaining owners and the deceased/disabled owner’s representatives agree on a value?
  • If the sale or liquidation is delayed there may not be sufficient cash to pay all debts.
  • This may result in the forced sale of personal assets to meet personal guarantees.
  • Unless all parties can agree, this alternative may be forced on them.
  • A business in liquidation or facing a forced sale has a much lower value than that of a going
    concern.
Upon the death, disability or major health trauma of one of several business owners who have been active in operating the business, the remaining owners must accept one of these alternatives.

Upon the death, disability or major health trauma of one of several business owners who have been active in operating the business, the remaining owners must accept one of these alternatives.

Franchise Brand Protection

For any Franchisor one of the biggest concerns is damage to the brand as this will not only impact the ability to sell more franchises but has the ability to impact the revenue of existing franchises and hence the franchise revenue.

One of the biggest causes of failure in any small business is the death or disability of the principal of that business. The impact of this is greatly magnified when we apply it to the franchise model.

Customers and trade creditors can be relentless in their search for recompense in the event of a business failure. They can and will harass other franchisee’s and the franchisor if they think there is some way they can elicit their dues from them.

Traditionally it has been difficult insuring start-up businesses’ for loss of revenue in the event of the principal’s incapacity as there is no historical data to base the cover on.

This has now been resolved.

PEAK FINANCIAL SERVICES can now offer a product that protects both the franchisor, the franchisee AND the franchisee’s business in the event of the death, temporary or permanent disablement of the franchisee.

If the franchisee is temporarily disabled the insurer will pay an agreed sum to the franchisor for them to step in and manage (or engage a manager) to look after the franchisee’s business until they recover for 12 months.

If at the end of 12 months the franchisee is still unable to return to work they will likely be classified as permanently disabled and the insurer will pay out an agreed sum to enable the franchisor to purchase the franchise back from the franchisee at the market value of the business (as agreed by the parties from time to time, each year as a minimum). The same thing will occur if the franchisee dies.

This gives both parties peace of mind.

The Franchisor knows that they can manage or re-purchase a franchise and so protect the image of their brand.

The franchisee and their family knows that in the event of their disability their business will be managed by the people who know it best and should they not be able to return to work they have a guaranteed buyer at an agreed market price.

And the cost of all this wonderful protection?

That will depend on a variety of factors but in some cases it has been as little as $20 per week.

It is important that the franchise agreement specifies that this cover is put in place and specifies the events which trigger the Franchisor to step in to manage and/or purchasing back the business.

With 30 years of experience in the industry, director Gary Palmer is well-positioned to assist and advise with this process.

Protecting Yourself From Your Franchisee’s Insurers

As a smart Franchisor, you will have made sure that your insurance provides for a level of Indemnity cover in the event of a Franchisee making a significant mistake and being found liable. But what happens when your Franchisee’s insurer pays out under their liability coverage and then decides that you should share in the cost and comes after you?

Yes, your liability coverage will (hopefully) protect you. But do you really want the time and grief of going through the process when you have better things to do with your time and energy?

In most situations, we at Peak Financial Services can ensure that the buck stops with your Franchisee’s insurer.
No cost to you as the Franchisor.
How do we do this?
Give us a call and set up a meeting.
We will review your and your Franchisee’s insurances and make the required alterations.
And in the process, we are likely to be able to expand your covers at no additional cost.