What is the Cream franchisee's responsibility regarding obtaining appropriate insurance coverage for their Shop?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Our requirements for minimum insurance coverage are not representations or warranties of any kind that such coverage is sufficient for your Shop's operations. Such requirements represent only the minimum coverage that we deem acceptable to protect our interests. It is your sole responsibility to obtain insurance coverage for your Shop that you deem appropriate, based on your own independent investigation. We are not responsible if you sustain losses that exceed your insurance coverage under any circumstances.
H. INSURANCE.
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 termination, we may (but are not required to) obtain such insurance for you and your Shop on your behalf, in which event you agree to cooperate with us and reimburse us on demand for 120% of the costs of all premiums.
- (14) types, amounts, terms, and conditions of insurance coverage required for your Shop, including criteria for your insurance carriers;
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees are responsible for securing adequate insurance coverage for their shop. While Cream specifies minimum insurance requirements to protect its own interests, these minimums are not a guarantee of sufficient coverage for the franchisee's specific needs. It is the franchisee's responsibility to conduct an independent investigation to determine and obtain the insurance coverage they deem appropriate for their Cream shop's operations. Cream is not liable for losses exceeding the franchisee's insurance coverage.
Cream also has the right to require franchisees to obtain insurance policies from a designated supplier, and the liability insurance must cover claims for bodily and personal injury, death, and property damage related to the shop's operation or the activities of its personnel. These policies must meet minimum coverage amounts and deductible limits set by Cream, which may be periodically increased or changed. The insurance policies must be purchased from licensed insurers with a rating of "A/VIII" or higher by A.M. Best Company.
Cream and its affiliates must be named as additional insureds on the liability coverage policies, and Cream must receive 30 days' prior written notice of any material modification, cancellation, or expiration of a policy. The insurance policies must include a waiver of subrogation rights against Cream and its affiliates. Franchisees must provide Cream with copies of their Certificates of Insurance or other proof of insurance coverage and premium payments. If a franchisee fails to maintain the required insurance, Cream has the option to obtain insurance on the franchisee's behalf and charge the franchisee 120% of the premium costs.
Cream also sets System Standards for the types, amounts, terms, and conditions of insurance coverage required for your Shop, including criteria for your insurance carriers.