What is the administrative surcharge applied if Beggars Pizza procures insurance on behalf of a franchisee?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
If you fail to obtain or maintain the insurance required by the Franchise Agreement for any reason, we have the right and authority (without, however, any obligation to do so) to procure the insurance coverage on your behalf. You must pay us the full premium paid plus an administrative surcharge of 10% if we do so.
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 15–18)
What This Means (2025 FDD)
According to Beggars Pizza's 2025 Franchise Disclosure Document, if a franchisee fails to obtain or maintain the required insurance, Beggars Pizza has the right to procure the insurance on the franchisee's behalf. If Beggars Pizza exercises this right, the franchisee must reimburse Beggars Pizza for the full premium paid for the insurance, in addition to an administrative surcharge of 10%.
This means that a Beggars Pizza franchisee could face an additional expense of 10% on top of the insurance premium if they fail to maintain their own insurance coverage. This surcharge is intended to cover the administrative costs incurred by Beggars Pizza in securing the insurance on behalf of the franchisee. It is important for prospective franchisees to understand this potential cost and ensure they maintain the required insurance to avoid it.
Franchisors often have the right to procure insurance on behalf of franchisees who fail to maintain their own coverage, but the specific terms, including any administrative surcharges, can vary. The 10% administrative surcharge charged by Beggars Pizza should be considered as part of the overall cost of operating the franchise and factored into the franchisee's financial planning.