How much business interruption coverage is required for a Nothing Bundt Cakes franchise?
Nothing_Bundt_Cakes Franchise · 2025 FDDAnswer from 2025 FDD Document
rights to access, use, create, distribute, publish and further develop those rights commonly referred to as "digital media rights," "digital advertisement right," or "persistent media in augmented reality."
Insurance
You must obtain and maintain, at your own expense, the insurance coverage that we periodically require and satisfy other insurance-related obligations. Our insurance obligations will be included in the Operations Manual and may be periodically updated. You must comply with any changed insurance requirements. You currently must have: (a) commercial general liability insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 aggregate for bodily injury, property damage, contractual liability, personal injury, advertising injury and a minimum of $100,000 for damage to premises leased to you; (b) comprehensive automobile liability coverage for all owned, non-owned and hired vehicles with limits of $1,000,000 Combined Single Limit or $1,000,000 per person, per accident and $1,000,000 property damage; (c) property insurance coverage on all furniture, fixtures, equipment, inventory and tenant improvements using 100% Replacement Cost valuation and written on Special Perils form, including coverage for loss of refrigeration, spoilage/contamination, and mechanical and electrical breakdown coverage; (d) business interruption coverage equal to at least 9 months of operating expenses or an Actual Loss Sustained form; (e) workers' compensation in the amounts required by state law; (f) employer's liability coverage of not less than $500,000; and (g) a commercial umbrella or excess liability policy with limits of at least $1,000,000. Premiums depend on the insurance carrier's charges, terms of payment, and your history. All insurance policies must name us and our affiliates that we designate as additional insured parties. Depending on your geographic location, you should consider disaster insurance for hurricanes, earthquakes and flood
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 36–40)
What This Means (2025 FDD)
According to Nothing Bundt Cakes's 2025 Franchise Disclosure Document, franchisees must obtain and maintain business interruption coverage equal to at least 9 months of operating expenses or an Actual Loss Sustained form. This insurance coverage is intended to protect the franchisee in the event that the business is temporarily unable to operate due to unforeseen circumstances such as property damage.
In addition to business interruption coverage, Nothing Bundt Cakes franchisees are required to maintain other insurance policies, including commercial general liability insurance with minimum limits of $1,000,000 per occurrence and $2,000,000 aggregate, comprehensive automobile liability coverage with limits of $1,000,000, and property insurance coverage on all furniture, fixtures, equipment, inventory, and tenant improvements using 100% Replacement Cost valuation. Franchisees must also carry worker's compensation, employer's liability coverage of not less than $500,000, and a commercial umbrella or excess liability policy with limits of at least $1,000,000.
The FDD specifies that all insurance providers must have a Best's Insurance Guide minimum rating of A-VI or better. Franchisees must furnish Nothing Bundt Cakes with certificates of insurance, and all policies must contain a waiver of subrogation in favor of Nothing Bundt Cakes and name them as additional insureds. Nothing Bundt Cakes must receive at least 30 days' prior written notice of any intent to reduce policy limits, restrict coverage, or cancel the policy. The franchisor also retains the right to change the amounts and types of coverage required.
Prospective franchisees should consult with an insurance advisor to determine the best coverage for their specific location, considering potential disasters such as hurricanes, earthquakes, and flooding. It is important to note that premiums depend on the insurance carrier's charges, terms of payment, and the franchisee's history. Franchisees must use an insurance company that is satisfactory to Nothing Bundt Cakes.