Multi-unit franchise workers comp turns on ownership. California combines entities for experience rating when the same person or group owns a majority interest in each, counting LLC members as equal owners. Arizona and Nevada use NCCI's plan, which combines businesses with more than 50% common majority ownership. California stays out of NCCI mods, so a three-state group may carry two.
Every Crew Deserves a Crown
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Franchise groups often open each store under its own LLC. For workers comp, the rating bureau and the carrier look past the separate names to who owns them. Ownership decides which units share an experience modification, which can sit on one policy, and what must be reported when a store changes hands.
Single-store questions, such as how a quick-service unit is classified or what the franchise agreement demands, are on the fast food franchise workers comp page; the restaurant workers comp insurance hub covers restaurants in all three states.
The California Experience Rating Plan effective September 1, 2026 says, in Section IV Rule 2, that separate entities are combined for experience rating when the same person or combination of persons owns a majority interest in each. If more than one combination is possible, the plan makes the one with the greatest expected losses.
How ownership is counted is where franchise groups get surprised. Section II Rule 8 counts an LLC as though each member owns an equal share, a partnership as though each general partner does, and a corporation by voting shares. In California, the profit split in an operating agreement doesn't decide the question; the member list does.
A California Department of Insurance precedential decision, file ALB-WCA-00-36, combined two restaurant corporations on the majority ownership of individuals, noting that the plan does not distinguish between types of entities. It concerned an older policy year, so confirm today's treatment with the carrier.
The WCIRB treats commonly owned entities, those with more than 50 percent common ownership, as one risk with one experience modification. Several entities in a risk are often written on one policy, but a policy cannot insure more than one risk, so stores with different majority owners stay on separate policies even under the same brand.
When a risk has several policies with different dates, Section V Rule 3 computes one modification every twelve months, on a rating effective date the WCIRB sets, for all of them. A risk is rated only once its eligibility value reaches $11,700 (modifications effective September 1, 2026), and a newly opened store isn't in the experience period yet.
Sharing a mod doesn't mean sharing a classification. The published classifications for full-service and for fast food or fast casual restaurants, 9080, 9083, each treat every restaurant that is separate and distinct on its own. A group with a sit-down concept and a counter-service brand may see its stores placed differently. Classification depends on each store's actual operations and the carrier's determination.
Payroll store by store is broken down in restaurant workers comp payroll by role, and workers comp for restaurants in California covers the state's restaurant classifications.
Outside California, NCCI's Experience Rating Plan combines businesses with more than 50% common majority ownership into one mod. Nevada uses that plan, per NCCI's Nevada approval circular posted by the Division of Insurance. NCCI is also Arizona's licensed rating organization, and Arizona is missing from NCCI's list of places the plan does not apply, which points to Arizona stores being rated under it; confirm with the carrier.
NCCI issues an interstate mod when an employer has exposure in two or more plan states. Its plan does not apply in California, so a group with stores in all three states may carry a WCIRB mod for California and a separate NCCI mod for Arizona and Nevada.
Nevada calls workers comp industrial insurance, and Nevada payroll takes in reported tips once they reach $20 a month, which California leaves out. See Nevada restaurant industrial insurance and Arizona restaurant workers compensation for store-level detail.
| State | Who Computes the Mod | When Entities Combine | How Ownership Is Counted |
|---|---|---|---|
| California | WCIRB, under the California Experience Rating Plan | The same person or combination of persons owns a majority interest in each | LLC members as equal shares; general partners equally; corporations by voting shares |
| Arizona | NCCI plan (participation inferred from NCCI's own list) | more than 50% common majority ownership | Under NCCI's plan rules; ask the carrier how your entities are read |
| Nevada (industrial insurance) | NCCI plan, per the Nevada approval circular | more than 50% common majority ownership | Under NCCI's plan rules; ask the carrier how your entities are read |
On the NCCI form, WC 00 00 00 C, the insured is the employer named in Item 1 of the Information Page, so a new LLC for a new store needs to be named; a sister LLC's coverage doesn't reach it. States work the same way: work that begins in a state not listed in Item 3.A on the effective date has no coverage unless the insurer is notified within thirty days.
Ownership changes can move experience between groups. NCCI's form ERM-14 asks employers to report ownership and combinability changes to the carrier in writing within 90 days. Whether a purchased store's past losses follow it into your group depends on the deal's structure and the bureau's rules, so send the purchase documents to the carrier before closing.
Arizona's franchise statute, Arizona Revised Statutes 23-1604, keeps a franchisor from being treated as the employer, or a co-employer, of a franchisee or the franchisee's staff for Title 23 purposes, which take in workers comp, unless the franchisor has signed on to that in writing. This guide doesn't state a California or Nevada rule on the point; ask counsel or the carrier.
A franchisor typically sets insurance terms in the franchise agreement instead. Under the FTC Franchise Rule, the disclosure document's Item 9 table lists n. Insurance among franchisee obligations, pointing to the agreement section that sets it. Some brands ask the franchisee's workers comp carrier to waive subrogation against the franchisor; others leave workers comp out of that clause. That endorsement is the subject of blanket waiver of subrogation workers comp.
Each state applies its owner rules entity by entity, so an owner who is an officer of one company and a managing member of another may be treated differently on each. Ask the carrier to show how it lists every owner on every entity.
Illustrative scenario
Illustrative only. Ana and Ben are the only members of two LLCs that each run a sandwich franchise in California. A third store's LLC has Ana, Ben and Ana's brother as members; a fourth has Ana and two outside investors, though its operating agreement gives Ana most of the profits. Counting members as equal shares, Ana and Ben hold a majority of the first three, so those stores may share one California mod, while the fourth may stand alone. Their Las Vegas store is rated under NCCI's plan, apart from the California mod. Confirm each grouping with the carrier.
Reading the Operating Agreement Instead of the Plan
Owners often judge which stores combine by the profit split in each operating agreement. California's plan counts LLC members as equal owners, so a store you think of as yours may stand alone, and one you thought separate may join your mod. List every member of every entity before renewal and ask the carrier how the bureau will group them.
With those in hand, get a restaurant workers comp quote for your franchise group. Audit records are covered in workers comp audit records, and restaurant and brewery workers comp lists every hospitality page here. Payroll, audit and owner topics for restaurant groups are gathered in the workers comp guides for contractors and restaurants.
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Only those with common majority ownership. California combines entities when the same person or combination of persons owns a majority interest in each. Arizona and Nevada, under NCCI's plan, combine businesses with more than 50% common majority ownership. A store with a different majority owner keeps its own mod.
Often, yes, when they belong to the same risk. The WCIRB says commonly owned entities are often on one policy, but a policy cannot insure more than one risk. On the NCCI form, each entity must be named in Item 1 of the Information Page to be insured.
In California it may be. The plan counts LLC ownership as though each member owns an equal share, so the two of you hold two of three equal shares, a majority, whatever the operating agreement says about profits. Send the carrier every entity's member list and confirm the grouping.
No. NCCI's Experience Rating Plan does not apply in California, where the WCIRB runs its own. Arizona and Nevada stores are rated under NCCI's plan, which issues an interstate mod when you have exposure in two or more plan states, so a three-state group may carry two mods.
It depends on how the purchase is structured and on the bureau's ownership rules. NCCI's form ERM-14 asks for ownership changes to reach the carrier in writing within 90 days. Send the purchase documents before closing so the effect on your mod is known early.
Not in Arizona unless the franchisor has agreed to it in writing: Arizona Revised Statutes 23-1604 rules out franchisor employer or co-employer status under Title 23, which takes in workers comp, absent that written agreement. For California and Nevada this guide doesn't state a rule, so ask counsel or the carrier, and plan on your own policy answering for your crews.
Tell the carrier before the first hire there. On the NCCI form, work that begins in a state not listed in Item 3.A has no coverage unless the insurer is notified within thirty days. Give the new entity's name, address and payroll by role.
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Reviewed by David Gleason, Principal, on .
Next Level Experience. Insurance Done Right.
Franchise workers comp across locations, grouped by who owns each entity.
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