What coverage basis is required for Commercial Property insurance for a Carls Jr. franchise?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- (4) Commercial Property insurance that extends 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. Covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%. Flood insurance is also required for locations that reside in FEMA Flood Zones beginning with the letters "A" or "V." Earthquake insurance is also required for locations that reside in FEMA Seismic Design Categories "E" or "D."
With respect to the Commercial Property coverage, CJR and its affiliates shall be named as Loss Payee.
- D. All required insurance policies shall be in full force and effect and Franchisee shall submit to CJR evidence of satisfactory insurance and proof of payment therefore no later than the date the first of the following occurs: (1) 30 days prior to the scheduled opening date of the Franchised Restaurant; (2) the date Franchisee takes possession of the Franchised Location, or (3) the date construction commences at the Franchised Location, if Franchisee is contractually obligated for the construction.
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees must maintain Commercial Property insurance that extends coverage on a replacement cost basis. This insurance should cover 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.
The covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%. Additionally, if the location resides in FEMA Flood Zones beginning with the letters "A" or "V," flood insurance is required. Earthquake insurance is also mandated for locations in FEMA Seismic Design Categories "E" or "D."
Carls Jr. also requires that with respect to the Commercial Property coverage, CJR and its affiliates shall be named as Loss Payee. Franchisees must provide evidence of satisfactory insurance and proof of payment to Carls Jr. no later than 30 days prior to the scheduled opening date of the Franchised Restaurant, the date Franchisee takes possession of the Franchised Location, or the date construction commences at the Franchised Location, if Franchisee is contractually obligated for the construction.