Experience Modifier (Ex Mod)

The Experience Modifier (Ex Mod) serves as the ultimate “risk barometer” for any business with a workforce, and for franchisors it is a critical metric to monitor across the network. The meaning of the Ex Mod is to provide an objective, data‑driven way for underwriters to reward or penalize a company based on its actual safety record. It is calculated by looking at a “rolling window” of three years of claims history (typically excluding the most recent year) and comparing those actual losses to the expected losses for companies with similar payrolls in the same class codes.

How it works

In a technical definition, the Experience Modifier (Ex Mod) acts as a multiplier. For example, a business with a 1.25 Ex Mod will pay 25 % more in premiums than a competitor with a 1.0 mod. This factor may refer to the financial health of a franchise system's operations; a high Ex Mod among franchisees often signals poor safety training or inadequate “return‑to‑work” programs.

Why it matters for franchisors

For the franchisor, understanding the Experience Modifier (Ex Mod) is vital because while they may not be the direct employer, a high “debit” mod at the franchisee level can lead to financial instability, higher turnover, and increased exposure to vicarious liability claims. Managing the Ex Mod isn’t just about insurance math—it’s about enforcing a culture of safety that protects the brand’s bottom line and its people.