How does the Cream franchisee's obligation to maintain insurance (Item 9) protect them against potential liabilities arising from accidents or injuries on their premises?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
During the Term, you must maintain in force at your sole expense the types and amounts of insurance that we require and that comply with the terms of your Lease. We reserve the right to require that you obtain all or a portion of your insurance policies from a designated supplier and on the terms and according to the specifications we approve. The liability insurance must cover claims for bodily and personal injury, death, and property damage caused by or occurring in connection with your Shop's operation or activities of your personnel in the course of their employment. All of these policies must contain the minimum coverage we prescribe from time to time and must have deductibles not to exceed the amounts we specify. We may periodically increase the amounts of coverage required under these insurance policies and/or require different or additional insurance coverages (including reasonable excess liability insurance) at any time. These insurance policies must be purchased from licensed insurers having a rating of "A/VIII" or higher by the then-current edition of Best Insurance Reports published by A.M. Best Company (or other similar publication or criteria we designate).
Each insurance policy for liability coverage must name us and any of our affiliates or other designees that we specify as additional named insureds, using a form of endorsement that we have approved, and provide for 30 days' prior written notice to us of a policy's material modification, cancellation, or expiration. Each insurance policy must contain a waiver of all subrogation rights against us and any of our affiliates or other designees that we specify. You must routinely furnish to us copies of your Certificates of Insurance or other evidence of your maintaining this insurance coverage and paying premiums. If you fail or refuse to obtain and maintain the insurance we specify, in addition to our other remedies including termi
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees are required to maintain specific insurance policies to protect against potential liabilities. Cream mandates that franchisees maintain insurance policies that cover claims for bodily and personal injury, death, and property damage that could occur in connection with the operation of the Cream shop or the activities of its personnel during their employment. These policies must meet minimum coverage amounts that Cream prescribes and must have deductibles that do not exceed amounts Cream specifies. Cream also retains the right to increase coverage amounts or require different or additional insurance coverages, including excess liability insurance, at any time.
Cream requires that these insurance policies be purchased from licensed insurers with a rating of "A/VIII" or higher by A.M. Best Company. Each liability coverage policy must name Cream and its affiliates as additional insureds and provide for 30 days' prior written notice to Cream of any material modification, cancellation, or expiration of the policy. Additionally, each policy must contain a waiver of all subrogation rights against Cream and its affiliates. Franchisees must routinely provide Cream with copies of their Certificates of Insurance or other evidence of maintaining coverage and paying premiums.
If a Cream franchisee fails to maintain the required insurance, Cream has the right to pursue other remedies, including terminating the Franchise Agreement. The insurance coverage requirements outlined in the FDD are designed to protect both the franchisee and Cream from financial losses due to unforeseen events, ensuring that the franchisee can continue operating their Cream shop without being financially devastated by a lawsuit or other claim.