What is the minimum coverage period for business interruption and extra expense insurance required for a Cinnaholic franchise?

According to Cinnaholic's 2025 Franchise Disclosure Document, franchisees must maintain business interruption and extra expense insurance for at least six months. This insurance coverage is specifically intended to cover net profits and continuing expenses, including royalty fees, during any period of business interruption.

This requirement ensures that Cinnaholic franchisees have a financial safety net to help them weather unexpected events that could temporarily halt operations, such as natural disasters, property damage, or other unforeseen circumstances. By covering net profits and ongoing expenses like royalty fees, the insurance helps franchisees stay afloat financially while they work to restore their business.

While Cinnaholic mandates a minimum of six months of coverage, the FDD also notes that franchisees may want to obtain greater coverage. The cost of insurance can vary based on factors such as the insurance carrier's charges, the terms of payment, and the franchisee's insurance history. Prospective franchisees should consult with insurance professionals to determine the appropriate level of coverage for their specific circumstances and risk tolerance.

Business interruption insurance is a fairly standard requirement in franchising, as it protects both the franchisee and the franchisor by ensuring the business can recover financially from unexpected disruptions. The six-month minimum coverage period provides a reasonable buffer for most common interruption scenarios, but franchisees should carefully assess their individual needs and consider whether additional coverage is warranted.