Is flood insurance required for a Gold Star restaurant, and under what condition?
Gold_Star Franchise · 2025 FDDAnswer from 2025 FDD Document
criteria for supplier approval available to Franchisees.
Insurance.
Before opening your Restaurant, you must obtain, and maintain at all times during the term of your franchise agreement, the following insurance coverage:
- Special Perils Insurance including theft on the Restaurant to include but not limited to all furniture, fixtures, equipment, signs (attached and unattached), exterior glass, supplies and other property used in the operation of the Restaurant (including flood and/or earthquake coverage where applicable,) for the full repair and replacement value with no coinsurance clause or applicable agreed amount.
- Boiler machinery insurance, provided any Building on the Premises contains equipment of the nature ordinarily covered by such a policy
- Flood Insurance if any material portion of the Premises is located in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards
- Plate glass insurance Covering the glass in the Premises.
- Commercial General Liability Insurance covering claims for bodily injury, property damage and personal injury, death, property and fire damage, and other damaging or injurious occurrences, with a minimum per occurrence limit of $1,000,000, $1,000,000 liquor liability per occurrence if applicable and a minimum general aggregate limit of $2,000,000.
- Commercial Umbrella $1,000,000 per occurrence, $1,000,000 aggregate. $5,000,000 per occurrence if liquor liability is applicable.
- Products/Completed Operations Aggregate with a minimum coverage of $2,000,000.
- Business Interruption Insurance for actual losses sustained or 12 months.
- Worker's Compensation Insurance and Employer's Liability (STOP GAP) that complies with the statutory requirements of the state in which the Restaurant is located and Employers' Liability Insurance with a minimum limit equal to or greater than the statutory minimum limit required by state law.
- Automotive $1,000,000 Combined Single Limit (CSL) for hired and non-owned automobiles.
- Any other insurance coverage that may be required by your lease.
- Recommended: Employment Practices Liabil
Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 21–25)
What This Means (2025 FDD)
According to Gold Star's 2025 Franchise Disclosure Document, flood insurance is required under specific circumstances. Before opening a Gold Star restaurant, franchisees must obtain and maintain several types of insurance coverage throughout the term of the franchise agreement. Among these is flood insurance, which is mandatory if any material portion of the premises is located in an area identified by the Federal Emergency Management Agency (FEMA) in the Federal Register as having special flood hazards.
In addition to flood insurance, Gold Star franchisees are required to carry special perils insurance, covering theft and damage to furniture, fixtures, equipment, signs, exterior glass, supplies, and other property used in the restaurant's operation. This special perils insurance should also include flood and/or earthquake coverage where applicable. Other mandatory insurance includes boiler machinery insurance (if the building contains relevant equipment), plate glass insurance, commercial general liability insurance with a minimum per occurrence limit of $1,000,000 (and $1,000,000 liquor liability if applicable), a commercial umbrella policy, products/completed operations aggregate coverage, business interruption insurance, worker's compensation insurance, and automotive coverage.
The insurance requirements ensure that Gold Star restaurants are adequately protected against various risks, including flood damage, which can be particularly important for locations in high-risk areas. Franchisees must ensure they meet these insurance obligations to protect their investment and maintain compliance with the franchise agreement. Furthermore, all insurance policies must name Gold Star Chili as an additional insured franchisor and include standard waivers of subrogation, with the franchisee's insurance being primary and non-contributory.