Is Cream required to be named as a co-defendant in the Employment Practices Liability coverage 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 the 2025 FDD, Cream franchisees are required to obtain Employment Practices Liability insurance with a $1,000,000 limit. This insurance must cover any wrongful employment action and third-party coverage for harassment and discrimination of non-employees.
Specifically, Cream must be named as a co-defendant in this Employment Practices Liability coverage. This requirement means that in the event of a lawsuit related to employment practices, both the franchisee and Cream would be named as defendants.
This requirement protects Cream from potential liability arising from the franchisee's employment practices and ensures that the franchisor has some control over the defense of such claims. It also means that the franchisee will likely have to pay higher premiums for this insurance coverage.