Under what conditions is flood insurance required for a Carls franchise location?

According to Carls's 2024 Franchise Disclosure Document, flood insurance is required for franchise locations that reside in FEMA Flood Zones beginning with the letters "A" or "V." This requirement is part of the broader commercial property insurance that Carls franchisees must maintain. The commercial property insurance should extend coverage on a replacement cost basis for the Franchised Restaurant, business personal property (including electronic equipment, tenant improvements & betterments), and business income and extra expense for a minimum of 12 months or actual loss sustained to cover loss of profits, continuing expenses and loss of rents.

This means that if a prospective Carls franchisee is considering a location within a designated FEMA flood zone (A or V), they will need to factor in the cost of flood insurance in addition to the standard commercial property insurance. The commercial property insurance must cover specific aspects such as business personal property, income, and extra expenses. The covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%.

Carls also requires earthquake insurance for locations in FEMA Seismic Design Categories "E" or "D." Franchisees must provide evidence of satisfactory insurance and proof of payment to CJR no later than 30 days prior to the scheduled opening date of the Franchised Restaurant, the date the Franchisee takes possession of the Franchised Location, or the date construction commences at the Franchised Location, if Franchisee is contractually obligated for the construction. Carls has the right to procure insurance on behalf of the franchisee if the franchisee fails to do so and charge the cost to the franchisee.