Who is responsible for the expense of the insurance policies for a Cream Shop?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
You must maintain in force at your sole expense insurance policies for your Shops as required under applicable law and your Lease, and in minimum types and amounts of coverage we require. Currently, our requirements include the following for each Shop:
| 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 | |
| for 180 days. | |
| Commercial General Liability | $1,000,000 per occurrence and $2,000,000 in the aggregate, |
| including bodily injury and property damage; $2,000,000 | |
| products liability, personal and advertising liability, and products | |
| and completed operations coverage. | |
| Auto Liability | $1,000,000 combined single limit for all owned, hired, and non- |
| owned automobiles used in connection with your Shop(s). |
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 solely responsible for the expense of maintaining insurance policies for their Cream shops. Cream requires franchisees to maintain these insurance policies as mandated by applicable law and their lease agreements. The insurance coverage must meet the minimum types and amounts specified by Cream.
The required insurance policies include Commercial Property Insurance, Commercial General Liability, and Auto Liability. Commercial Property Insurance must cover the full replacement cost value of all leasehold improvements, furniture, fixtures, equipment, and inventory on a special form basis. It also needs to include flood and earthquake coverage in geographically prone zones, business income and extra expense coverage for 12 months (or at least 50% of annual revenue), rent and royalties due to Cream, and extended business income coverage for 180 days. Commercial General Liability insurance must have a minimum of $1,000,000 per occurrence and $2,000,000 in the aggregate, covering bodily injury and property damage, as well as $2,000,000 for products liability, personal and advertising liability, and products and completed operations coverage. Auto Liability insurance requires a $1,000,000 combined single limit for all owned, hired, and non-owned automobiles used in connection with the Cream shop.
This requirement means that prospective Cream franchisees need to factor in the cost of these insurance policies when assessing the overall investment and operating expenses of the franchise. Failing to maintain the required insurance coverage could result in a breach of the franchise agreement and potential legal and financial repercussions. It is common practice in franchising for franchisees to bear the cost of insurance, as it directly relates to the operation and assets of their individual business location. Cream also requires franchisees to purchase insurance from their designated suppliers.