Under what circumstances is flood insurance required for a Carls Jr. restaurant?
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."
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, flood insurance is required for franchised restaurant locations that reside in FEMA Flood Zones beginning with the letters "A" or "V."
Carls Jr. franchisees must maintain commercial property insurance that covers the replacement cost of the franchised restaurant, business personal property, tenant improvements, and business income for a minimum of 12 months. The covered causes of loss should be "Special Form" or "All Risk" with coinsurance conditions not less than 80%. Earthquake insurance is also mandated for locations in FEMA Seismic Design Categories "E" or "D."
It is important for prospective Carls Jr. franchisees to verify the flood zone status of their potential restaurant location with FEMA to ensure compliance with the insurance requirements. Failure to obtain and maintain the required insurance coverage could result in a breach of the franchise agreement.