What is the minimum Employment Practices Liability coverage limit required for a Cream franchise?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
| Workers’ Compensation | Statutory minimum coverage amounts, with employer liability minimum limit of $1,000,000. |
|---|---|
| Umbrella Liability | Not less than $3,000,000 to be in excess of Commercial General Liability, Auto Liability, and Employer’s Liability. |
| Trade Name Restoration/Food Borne Illness | $1,000,000 to cover lost profits due to any alleged or actual contamination, supplier contamination, inoculations, and testing. Coverage must also include crisis management expense coverage. |
| Employment Practices Liability | $1,000,000 limit for coverage of any wrongful employment action and third-party coverage for harassment and discrimination of non-employees. Coverage must name us as co- defendant. |
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 24–27)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees must maintain Employment Practices Liability insurance with a minimum coverage limit of $1,000,000. This coverage is intended to protect against any wrongful employment action. It also includes third-party coverage for harassment and discrimination claims made by non-employees.
Cream requires that the franchisor is named as a co-defendant in the Employment Practices Liability coverage. This means that in the event of a claim, Cream could be directly involved in the legal proceedings and potentially share in the liability.
For a prospective Cream franchisee, this requirement means securing an insurance policy that meets this specific coverage limit and includes Cream as a co-defendant. Failure to maintain the required insurance coverage could result in the franchisee being in breach of the Franchise Agreement, potentially leading to penalties or even termination of the agreement.