Under what circumstances is a Cinnabon franchisee required to obtain Flood insurance for their Business Property Insurance?

According to the 2025 Cinnabon Franchise Disclosure Document, a franchisee is required to obtain flood insurance under specific circumstances related to the location of their business. The FDD specifies that if the Cinnabon location resides in a FEMA Flood Zone beginning with the letters "A" or "V", the franchisee must obtain flood insurance coverage as part of their Business Property Insurance. This requirement is in addition to the standard coverage that extends to business personal property, electronic equipment, tenant improvements, betterments, business income, and extra expenses, with covered causes of loss as "Special" or "All Risk" with coinsurance conditions not less than 80%.

This flood insurance requirement is tied to the location of the Cinnabon franchise and the associated risk of flooding as determined by FEMA flood zones. FEMA designates flood zones to indicate areas with varying degrees of flood risk. Zones starting with "A" or "V" typically represent areas with a higher risk of flooding, hence the mandatory flood insurance. This requirement ensures that the franchisee's business property is protected against potential flood damage, which can be financially devastating.

For a prospective Cinnabon franchisee, this means that during the site selection process, it is crucial to determine whether the location falls within a FEMA Flood Zone beginning with the letters "A" or "V". If it does, the franchisee must factor in the cost of flood insurance when budgeting for their Business Property Insurance. Failing to obtain the required flood insurance could result in a breach of the franchise agreement and potential financial losses in the event of a flood. It is also important to note that Cinnabon may modify the mandatory insurance coverages required in accordance with reasonable and customary changes in the industry.