What is the minimum amount of property insurance a Churchs Chicken sublessee must obtain for damage to the premises?
Churchs_Chicken Franchise · 2025 FDDAnswer from 2025 FDD Document
At its own expense, Sublessee shall obtain and continue in force the following insurance policies, or any other insurance policies to be carried by Sublessor under the Master Lease, and such insurance shall name Sublessor, as well as Master Landlord, and other entities in the manner required therein:
- i.
Property insurance for damage to the Premises, including Sublessee's leasehold improvements in an amount at least equal to one hundred percent (100%) of the full replacement cost thereof (exclusive of the cost of excavations, foundations and footings) under an ISO Causes of Loss – Special Form policy, or its equivalent.
If the property is prone to geological phenomenon such as earthquakes or is located in flood zone A/V, Sublessee must purchase insurance to cover such risks.
Sublessee's property policy shall name Sublessor and its Lender as loss payee.
Source: Item 23 — RECEIPT (FDD pages 68–406)
What This Means (2025 FDD)
According to Churchs Chicken's 2025 Franchise Disclosure Document, a sublessee must secure property insurance for damage to the premises. This insurance must cover 100% of the full replacement cost of the premises, excluding excavations, foundations, and footings. The policy should be under an ISO Causes of Loss – Special Form policy, or its equivalent.
In practical terms, this means a Churchs Chicken sublessee needs to obtain a property insurance policy that can cover the entire cost of rebuilding the restaurant if it were completely destroyed, not factoring in the cost of the land or the underground foundation. This ensures that in the event of a disaster, the sublessee can restore the premises to its original condition without incurring significant out-of-pocket expenses.
Furthermore, if the Churchs Chicken property is in an area prone to geological events like earthquakes or located in a flood zone A/V, the sublessee is also required to purchase additional insurance to cover these specific risks. This highlights the importance of assessing the location-specific risks and securing appropriate coverage to protect against potential losses from natural disasters. The sublessee's property policy must name Sublessor and its Lender as loss payee.