Under what conditions is flood insurance required for a Carls Jr. franchise location?
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 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 franchisees must maintain.
This means that if a prospective Carls Jr. franchisee is considering a location within a designated FEMA flood zone (specifically those starting with "A" or "V"), they will need to factor in the cost of flood insurance as part of their operating expenses. These zones are typically areas identified as having a higher risk of flooding, and the insurance is meant to protect the business's physical assets and income.
The commercial property insurance must extend coverage on a replacement cost basis for the Franchised Restaurant, business personal property, tenant improvements, and business income. It should also cover 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%. Earthquake insurance is also required for locations that reside in FEMA Seismic Design Categories "E" or "D."