Does the commercial property insurance for a Cream franchise need to include flood and earthquake coverage, and under what conditions?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
automobiles used in connection with your Shop(s). |
| Policy/Coverage Type | Minimum Limits | |
|---|---|---|
| Commercial Property Insurance | Full replacement cost value of all leasehold improvements, | |
| furniture, fixtures, equipment, and inventory on a special form | ||
| basis. This coverage must also include (i) flood and earthquake | ||
| coverage in geographically prone zones, (ii) business income | ||
| and extra expense coverage for 12 months for actual losses | ||
| sustained or at least 50% of your annual revenue, (iii) rent and | ||
| royalties due to us, and (iv) extended business income coverage | ||
| for 180 days. | ||
| Commercial General Liability | $1,000,000 per occurrence and $2,000,000 in the aggregate, | |
| including bodily injury and property damage; $2,000,000 | ||
| products liability, personal and advertising liability, and products | ||
| and completed operations coverage. | ||
| Auto Liability | $1,000,000 combined single limit for all owned, hired, and non- | |
| owned automobiles used in connection with your Shop(s). |
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees must obtain commercial property insurance that includes flood and earthquake coverage under specific conditions. The commercial property insurance must cover the full replacement cost value of all leasehold improvements, furniture, fixtures, equipment, and inventory on a special form basis. This insurance coverage is required to include flood and earthquake coverage in geographically prone zones.
In addition to flood and earthquake coverage, the commercial property insurance must also include business income and extra expense coverage for 12 months for actual losses sustained or at least 50% of your annual revenue. It must also cover rent and royalties due to Cream, and extended business income coverage for 180 days.
Cream also mandates that franchisees maintain commercial general liability insurance with a minimum of $1,000,000 per occurrence and $2,000,000 in the aggregate, covering bodily injury and property damage. This also includes $2,000,000 in products liability, personal and advertising liability, and products and completed operations coverage. Furthermore, franchisees must have auto liability insurance with a $1,000,000 combined single limit for all owned, hired, and non-owned automobiles used in connection with their Shops.