What is the Cream franchisee's obligation regarding insurance if they fail to obtain it themselves?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
M 6 OTHER FEES**
| Type of Fee | Amount | Due Date | Remarks 1, 2 |
|---|---|---|---|
| Interest on Late Payment | Lesser of 1.5% per month or the highest commercial contract rate allowed by law | As incurred | All amounts which you owe us for any reason wi |
Source: Item 6 — OTHER FEES (FDD pages 13–17)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, if a franchisee fails or refuses to obtain and maintain the insurance coverage that Cream specifies, Cream has the right to obtain the insurance on behalf of the franchisee and their shop. In this case, the franchisee is responsible for paying Cream 120% of the insurance premiums paid by Cream. This fee is due as incurred.
This means that Cream franchisees must maintain the required insurance coverage to avoid Cream securing it for them and charging an additional 20% on top of the premium cost. This could significantly increase the cost of insurance for the franchisee. Franchisees should ensure they understand Cream's insurance requirements and maintain adequate coverage to avoid this additional expense.
Many franchisors have specific insurance requirements to protect the brand and ensure consistent coverage across all locations. It is not uncommon for franchisors to secure insurance on behalf of franchisees who fail to do so themselves, but the additional 20% charge that Cream levies is something a prospective franchisee should consider.