What happens if a Beggars Pizza franchisee fails to maintain required insurance?
Beggars_Pizza Franchise · 2025 FDDAnswer from 2025 FDD Document
You must obtain before opening the Restaurant, and maintain in full force and effect at all times during the term of the Franchise Agreement, at your expense, insurance policies protecting you, us, and your and our respective officers, directors, partners, agents and employees against any demand or claim with respect to personal injury, death or property damage, or any loss, liability or expense arising or occurring in connection with the Restaurant, including comprehensive general liability insurance, property and casualty insurance, business interruption insurance, statutory workers' compensation insurance, employer's liability insurance, product liability insurance, liquor liability (dram shop), and automobile insurance coverage for all vehicles used in connection with the Restaurant. These policies must be written by a responsible carrier or carriers acceptable to us and must name both us and Begcom as additional insureds, and must provide at least the types and minimum amounts of coverage specified in the Manuals.
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, franchisees are required to maintain specific insurance policies throughout the term of the Franchise Agreement. These policies protect the franchisee, Beggars Pizza, and their respective officers, directors, partners, agents, and employees against claims related to personal injury, death, property damage, or any loss, liability, or expense connected to the restaurant. The required insurance includes comprehensive general liability insurance, property and casualty insurance, business interruption insurance, statutory workers' compensation insurance, employer's liability insurance, product liability insurance, liquor liability (dram shop), and automobile insurance coverage for all vehicles used in connection with the Restaurant. These policies must be written by a responsible carrier acceptable to Beggars Pizza and must name both Beggars Pizza and Begcom as additional insureds, providing at least the types and minimum amounts of coverage specified in the Manuals.
If a franchisee fails to obtain or maintain the required insurance, Beggars Pizza has the right, but not the obligation, to procure the insurance coverage on the franchisee's behalf. If Beggars Pizza chooses to do so, the franchisee is responsible for paying the full premium paid by Beggars Pizza, plus an administrative surcharge of 10%. This means that in addition to the cost of the insurance itself, the franchisee will incur an additional expense for Beggars Pizza's administrative efforts in securing the coverage.
This provision in the Franchise Agreement is fairly standard in the franchise industry. It protects both the franchisee and the franchisor from potential liabilities and ensures that the business can continue to operate even in the event of unforeseen circumstances. The fact that Beggars Pizza can step in to secure coverage is beneficial, but the added 10% surcharge highlights the importance of franchisees proactively managing their insurance requirements to avoid additional costs and potential disruptions to their business.