Who is responsible for the cost of the required insurance policies for a Cinnaholic franchise?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
aim. This indemnity will continue in effect after the expiration or termination of this Agreement. Under no circumstances will Franchisor or any other Indemnified Party be required to seek recovery from any insurer or other third party, or otherwise to mitigate its or their losses and expenses, in order to maintain and recover fully a claim against Franchisee.
- 18.2. Insurance. Franchisee agrees to secure and maintain during the term of this Agreement, at its own cost, the following insurance policies by carriers approved by Franchisor:
- (i) Such insurance as may be required by the terms of any lease for the Franchised Site or, if there is no such lease, Franchisee agrees to carry fire and extended coverage insurance covering the building and all equipment, supplies, products, inventory, furniture, fixtures and other tangible property located in the Bakery or on the Franchised Site in the amount of the full insurable value of such property.
- (ii) Commercial General Liability Insurance, including coverages for productscompleted operations, contractual liability, personal and advertising injury, fire damage, medical expenses, and dram shop/liquor liability, having a combined single limit for bodily injury and property damage of $1,000,000 per occurrence and $2,000,000 in the aggregate (except for fire damage and medical expense coverages, which may have different limits of not less than $300,000 for one fire and $5,000 for one person, respectively); plus (ii) non-owned automobile liability insurance and, if Franchisee owns, rents or identifies any vehicles with any Mark or vehicles are used in connection with the operation of the Bakery, automobile liability coverage for owned, non-owned, scheduled and hired vehicles having a combined single limit of $1,000,000 per occurrence; plus (iii) excess liability umbrella coverage for the general liability and automobile liability coverages in an amount of not less than $2,000,000 per occurrence and aggregate. All such coverages shall be on an occurrence basis and shall provide for waivers of subrogation.
- (iii) Workers' compensation insurance, or a similar policy if the Bakery is located in a non-subscriber state, covering all of its employees as is required by law.
- (iv) Adequate limits for comprehensive crime and blanket employee dishonesty insurance.
- (v) Business interruption and extra expense insurance for a minimum of six months to cover net profits and continuing expenses (including Royalty Fees).
Franchisee agrees that Franchisor shall be named as an additional insured under each of the foregoing insurance policies. Before the opening of the Bakery and, thereafter, at least 30 days before the expiration of any such policy or policies, Franchisee shall deliver to Franchisor certificates of insurance evidencing the proper coverage with limits not less than those required hereunder, and all such certificates shall expressly contain endorsements requiring the insurance company to give Franchisor at least 30 days written notice in the event of material alteration to termination, non-renewal, or cancellation of, the coverages evidenced by such certificates and notice of any claim filed under such policy within 30 days after the filing of such claim. Franchisor may, from time to time, during the term of this Agreement, at its sole option, require that the minimum limits and types of insurance coverage, as specified above, be increased or changed as determined solely by Franchisor. If Franchisee at any time fails or refuses to maintain any insurance coverage required by Franchisor or to furnish satisfactory evidence thereof, Franchisor, at its option and in addition to its other rights and remedies hereunder, may, but need not, obtain such insurance coverage on behalf of Franchisee, and Franchisee shall pay to Franchisor on demand any premiums incurred by Franchisor in connection therewith. Franchisee's obligation to obtain and maintain, or cause to be obtained and maintained, the foregoing policy or policies in the amounts specified shall not be limited in any way by reason of any insurance which may be maintained by Franchisor, nor shall Franchisee's performance of that obligation relieve it of liability under the indemnity provisions set forth in Section 18.1 hereof. Notwithstanding the existence
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, the franchisee is responsible for securing and maintaining the required insurance policies at their own cost during the term of the agreement.
The franchisee must obtain insurance policies from carriers approved by Cinnaholic. These policies include fire and extended coverage insurance, commercial general liability insurance with specific coverage amounts, worker's compensation insurance, comprehensive crime and employee dishonesty insurance, and business interruption insurance. The commercial general liability insurance must have a combined single limit of $1,000,000 per occurrence and $2,000,000 in the aggregate, with specific limits for fire damage and medical expenses. Additionally, the franchisee needs non-owned automobile liability insurance and, if applicable, automobile liability coverage with a combined single limit of $1,000,000 per occurrence, along with excess liability umbrella coverage of not less than $2,000,000 per occurrence and aggregate.
Cinnaholic must be named as an additional insured on all policies, and the franchisee must provide certificates of insurance to Cinnaholic before opening the bakery and at least 30 days before any policy expires. These certificates must include endorsements requiring the insurance company to provide Cinnaholic with 30 days' notice of any material changes or cancellation of the policies, as well as notice of any claims filed. Cinnaholic retains the right to modify the minimum limits and types of insurance coverage required.
If a franchisee fails to maintain the required insurance, Cinnaholic has the option to obtain coverage on the franchisee's behalf, and the franchisee must reimburse Cinnaholic for the premiums. The franchisee's insurance obligations are not limited by any insurance Cinnaholic may maintain, and the franchisee remains responsible for all losses, damages, and liabilities related to the operation of the franchised business.