If a Cream franchisee fails to maintain the required insurance, can Cream obtain insurance on their behalf?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
If you fail to take any of the actions or refrain from taking any of the actions described above, we may take whatever action and sign whatever documents we deem appropriate on your behalf to cure the deficiencies, including, without liability to you or third parties for trespass or any other claim, to enter the Premises and remove any signs or other materials containing any Marks from your Shop. You must reimburse us for all costs and expenses we incur in correcting any such deficiencies. You hereby appoint us as your true and lawful attorney-in-fact to take such actions and execute such documents on your behalf as may be required to effect the foregoing purposes.
C. COVENANT NOT TO COMPETE.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to the 2025 FDD, if a Cream franchisee fails to maintain the required insurance, Cream does not explicitly state that they will obtain insurance on the franchisee's behalf. However, Cream does reserve the right to take actions and sign documents deemed appropriate to correct deficiencies. This includes the ability to enter the premises and remove signs containing any marks from the shop. The franchisee is responsible for reimbursing Cream for all costs and expenses incurred in correcting any such deficiencies. Cream is appointed as the franchisee's attorney-in-fact to take such actions and execute documents to effect these purposes.
While the FDD does not directly state that Cream will obtain insurance, it does state that failure to maintain insurance can lead to termination of the franchise agreement if the failure is not corrected within 10 days after written notice. This implies the franchisee has a limited time to rectify the insurance lapse.
Prospective franchisees should clarify with Cream the specific circumstances under which Cream might act to secure insurance on their behalf, and what the costs and procedures would entail. Understanding Cream's specific actions in such scenarios is crucial for franchisees to avoid potential termination and ensure continuous operation of their Cream franchise.