Does Chatime require franchisees to maintain build-out insurance coverage?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
us if so
designated.
- (10) Insurance. We currently require that you maintain the following insurance coverages: A) general liability coverage with minimums of $1 million per occurrence, $2 million general and products/completed operations aggregate, $1 million personal/advertising injury, $50,000 rented premises damage, and $5,000 medical expenses; B) franchisee commercial auto insurance with a $1 million combined single limit; C) workers compensation insurance with coverage limits of $1 million for bodily injury by disease per accident, $1 million policy limit, and $1 million per employee, regardless of state laws and cannot exclude owner-operators; D) property/business interruption coverage business personal property, tenant improvements, equipment, business interruption, and franchisor royalties, for a minimum of 12 months' actual loss sustained; E) cyber liability insurance with minimum coverage limits of $250,000 per occurrence and $250,000 aggregate; F) employment practices liability insurance with minimum coverage limits of $500,000 per occurrence and $500,000 aggregate, which includes third party liability and wage & hour coverage of at least $25,000, with a maximum deductible that does not exceed $25,000; G) crime insurance with a minimum coverage of $100,000 for each claim. We recommend that yo
Source: Item 7 — Estimated Initial Investment (FDD pages 17–22)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, while build-out insurance is not explicitly required, it is recommended. The FDD states, "We recommend that you maintain build-out insurance coverage." This means that Chatime suggests franchisees obtain insurance coverage during the construction or renovation phase of setting up their store, but it is not mandatory.
However, Chatime does mandate several other insurance coverages. These include general liability coverage with minimums of $1 million per occurrence and $2 million general and products/completed operations aggregate. Franchisees must also maintain commercial auto insurance with a $1 million combined single limit, workers compensation insurance with $1 million coverage limits, property/business interruption coverage, cyber liability insurance with minimum coverage limits of $250,000 per occurrence and $250,000 aggregate, employment practices liability insurance with minimum coverage limits of $500,000 per occurrence and $500,000 aggregate, and crime insurance with a minimum coverage of $100,000 for each claim.
For a prospective Chatime franchisee, understanding the difference between recommended and required insurance is crucial. While build-out insurance offers protection against potential losses during the construction phase, the other mandated insurance policies are essential for ongoing operations and risk management. Franchisees should carefully consider the recommendation for build-out insurance, weighing the potential costs against the benefits of protecting their investment during the build-out phase. It would be prudent to discuss the specifics of build-out insurance with Chatime to understand the types of coverage that would be most beneficial.