What is the minimum required coverage period for extended business income coverage under the commercial property insurance for a Cream shop?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
automobiles used in connection with your Shop(s). |
| Policy/Coverage Type | Minimum Limits | |
|---|---|---|
| Commercial Property Insurance | Full replacement cost value of all leasehold improvements, | |
| furniture, fixtures, equipment, and inventory on a special form | ||
| basis. This coverage must also include (i) flood and earthquake | ||
| coverage in geographically prone zones, (ii) business income | ||
| and extra expense coverage for 12 months for actual losses | ||
| sustained or at least 50% of your annual revenue, (iii) rent and | ||
| royalties due to us, and (iv) extended business income coverage | ||
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, franchisees are required to maintain commercial property insurance that includes extended business income coverage for a minimum period of 180 days. This insurance coverage is part of a broader set of requirements for commercial property insurance, which also includes covering the full replacement cost value of all leasehold improvements, furniture, fixtures, equipment, and inventory on a special form basis.
In addition to the extended business income coverage, the commercial property insurance must also include flood and earthquake coverage in geographically prone zones. It should also cover business income and extra expenses for 12 months, covering actual losses sustained or at least 50% of the franchisee's annual revenue. Furthermore, the insurance must cover rent and royalties due to Cream.
This comprehensive insurance requirement ensures that Cream franchisees are protected against a variety of potential losses, including property damage, business interruption, and liability claims. The extended business income coverage, specifically, provides a safety net for franchisees by helping to replace lost income during the period it takes to recover from a covered event. Franchisees should carefully review these insurance requirements and obtain adequate coverage to protect their investment and business operations.