diff --git a/templates/flavors/README.md b/templates/flavors/README.md
new file mode 100644
index 000000000..c297af5a1
--- /dev/null
+++ b/templates/flavors/README.md
@@ -0,0 +1,20 @@
+# Flavors
+
+In `clusterctl` the infrastructure provider authors can provide different types
+of cluster templates referred to as "flavors". You can use the `--flavor` flag
+to specify which flavor to use for a cluster, e.g:
+
+```shell
+clusterctl generate cluster test-cluster --flavor clusterclass
+```
+
+To use the default flavor, omit the `--flavor` flag.
+
+See the [`clusterctl` flavors docs](https://cluster-api.sigs.k8s.io/clusterctl/commands/generate-cluster.html#flavors) for more information.
+
+This directory contains each of the flavors for CAPL. Each directory besides `base` will be used to
+create a flavor by running `kustomize build` on the directory. The name of the directory will be
+appended to the end of the cluster-template.yaml, e.g cluster-template-{directory-name}.yaml. That
+flavor can be used by specifying `--flavor {directory-name}`.
+
+To generate all CAPL flavors, run `make generate-flavors`.