What does Cinnaholic's business interruption and extra expense insurance need to cover?

According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees must secure business interruption and extra expense insurance. This insurance must cover a minimum of six months to cover net profits and continuing expenses, including Royalty Fees.

This requirement ensures that if a Cinnaholic location faces a temporary closure due to unforeseen circumstances like a fire, natural disaster, or other covered events, the franchisee has a financial safety net. The insurance coverage helps to replace lost net profits during the interruption and covers ongoing expenses that continue even when the business is not fully operational.

Including Royalty Fees in the coverage is particularly important. Royalty fees are typically a percentage of gross sales, and franchisees must continue to pay them even if the store is temporarily closed. This insurance provision helps franchisees meet their financial obligations to Cinnaholic during challenging times.

By mandating this level of insurance, Cinnaholic aims to protect both the franchisee's and the franchisor's interests, ensuring financial stability and continuity despite potential disruptions to the business. Franchisees should carefully review the terms and conditions of their insurance policies to ensure they meet Cinnaholic's requirements and adequately protect their investment.