Under what conditions is earthquake insurance required 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."
Source: Item 22 — CONTRACTS (FDD pages 75–76)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, earthquake insurance is required for franchise locations that reside in FEMA Seismic Design Categories "E" or "D." This requirement is part of the broader commercial property insurance that franchisees must maintain.
This insurance must extend coverage on a replacement cost basis for the Franchised Restaurant, including business personal property, tenant improvements, and business income. The coverage should also include extra expenses 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%.
In addition to earthquake insurance, flood insurance is also required for Carls Jr. locations that reside in FEMA Flood Zones beginning with the letters "A" or "V." These insurance requirements are designed to protect both the franchisee and Carls Jr. from significant financial losses due to natural disasters and other unforeseen events.