Is Cream responsible if a franchisee sustains losses that exceed their insurance coverage?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
Our requirements for minimum insurance coverage are not representations or warranties of any kind that such coverage is sufficient for your Shop's operations. Such requirements represent only the minimum coverage that we deem acceptable to protect our interests. It is your sole responsibility to obtain insurance coverage for your Shop that you deem appropriate, based on your own independent investigation. We are not responsible if you sustain losses that exceed your insurance coverage under any circumstances.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Cream is not responsible for covering losses that exceed a franchisee's insurance coverage. Cream stipulates minimum insurance coverage requirements, but these are only to protect Cream's interests and are not a guarantee of sufficient coverage for the franchisee's shop operations.
It is the franchisee's responsibility to secure adequate insurance coverage based on their own assessment of risk and operational needs. This means a franchisee must independently determine the appropriate level of coverage necessary to protect their Cream shop from potential losses, considering factors specific to their location, operations, and risk tolerance.
This aspect of the FDD highlights the importance of franchisees conducting thorough due diligence regarding insurance. Franchisees should consult with insurance professionals to assess their specific risks and ensure they obtain sufficient coverage to protect their investment. Relying solely on Cream's minimum requirements may leave a franchisee vulnerable to significant financial losses if an incident occurs that exceeds those minimums.