What are the Cinnabon franchisee's obligations regarding insurance (Item 9) and how does this relate to the franchisor's requirements for insurance coverage (Item 8)?
Cinnabon Franchise · 2025 FDDAnswer from 2025 FDD Document
your Franchised Business.
16. Section 11.2 (On-Site Training):
If this is one of your first two Franchised Businesses (including Franchised Businesses owned by your affiliates), we will send one or more of our representatives to the Franchised Business, at our expense, for a maximum of 3.5 days concurrent with beginning operations to assist in the opening of the Bakery. If you offer Carvel® Products, you must pay us the then-current Carvel® Product Platform Training Fee and our representatives will provide two days of related On-Site Training.
17. Section 13.2 (Required Insurance)
Currently, you must obtain and maintain the following coverage:
-
- Comprehensive General Liability Insurance, including Products & Completed Operations coverage with limits not less than $1,000,000 per occurrence and $2,000,000 in the aggregate with a maximum $5,000 deductible per occurrence;
-
- Dram Shop Liability (if you serve alcohol) with limits not less than $1,000,000 per occurrence and $2,000,000 in the aggregate;
-
- Statutory Workers' Compensation insurance, including employer's liability insurance, with limits not less than $500,000;
-
- Automobile Liability insurance with a combined single limit of $1,000,000 for any owned, hired, or non-owned automobile used in connection with the Franchised Business;
-
- "Follow Form" Umbrella/Excess Liability Policy with limits not less than $2,000,000 per occurrence and in the aggregate that is in excess of items 1, 2, 3 (employer's liability insurance only) and 4 above;
-
- Business Property Insurance that extends coverage on a replacement cost basis for business personal property including electronic e
What This Means (2025 FDD)
According to the 2025 Cinnabon FDD, franchisees must maintain specific insurance coverage during the term of their Franchise Agreement. This includes several types of liability and property insurance with minimum coverage amounts. The franchisee's insurance obligations are detailed in Item 23. Item 8, however, is not included in the provided excerpts, so the franchisor's insurance requirements are not available.
Specifically, franchisees must have Automobile Liability insurance with a combined single limit of $1,000,000 for vehicles used in connection with the franchised business. They also need a "Follow Form" Umbrella/Excess Liability Policy with limits not less than $2,000,000 per occurrence and in the aggregate, exceeding the limits of the automobile and employer's liability coverage. Business Property Insurance is required to cover business personal property, electronic equipment, tenant improvements, and business income, with coverage on a replacement cost basis and including flood coverage if the location is in a FEMA Flood Zone.
Additionally, franchisees must maintain Employment Practices Liability insurance with limits not less than $1,000,000 per employee and $1,000,000 per accident, as well as Cyber Liability insurance with limits not less than $1,000,000. If a franchisee obtains a claims-made policy, they must provide tail coverage for at least one year after the agreement expires or the business closes. For Express Bakeries located in a Host Facility, the insurance may be the same as that carried for the Host Facility, provided it meets the specified requirements.
If the franchisee serves alcohol, they must carry Dram Shop Liquor Liability insurance with limits not less than $1,000,000 per occurrence and $2,000,000 in the aggregate. The franchisor may also recommend or require Employment Practices Liability insurance (including third-party and Wage & Hour coverage) and Cyber Liability insurance, specifying minimum requirements in the Manuals if required. It is important to note that the FDD does not specify the franchisor's insurance requirements in Item 8, so a prospective franchisee should inquire about this information to understand the full scope of insurance-related obligations and how they align between the franchisor and franchisee.