If Pearce Bespoke obtains insurance on behalf of a franchisee, is the franchisee obligated to reimburse Pearce Bespoke?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
ecuted Confidentiality/Non-Competition Agreements from employees, agents and third persons as required by this Section.
10. INSURANCE; BONDING
A. Insurance.
Franchisee will obtain and maintain in force (under policies of insurance issued by a carrier that is rated A- or better by AM Best) and pay the premiums for public liability insurance with products/completed operations coverage and premises liability of no less than one million dollars ($1,000,000.00) per occurrence and two million dollars ($2,000,000.00) in the aggregate, bailee insurance protecting Franchisee's consignment goods and other insurance in such types and amounts as Franchisor may reasonably require. Such insurance policies will expressly protect both Franchisee and Franchisor and will require the insurer to defend both Franchisee and Franchisor in any action. In addition, each such insurance policy must name Franchisor as an additional insured, and provide that such policy will not be canceled, amended, or modified except upon thirty (30) days' prior written notice to Franchisor. On an annual basis and upon Franchisor's request, Franchisee will furnish to Franchisor endorsements or other proof of insurance Franchisor requires evidencing that Franchisee has obtained and is maintaining in force all required insurance policies. Maintenance of the insurance requirement will not relieve Franchisee of the obligations of indemnification stated in Section 11 below. If Franchisee fails to obtain or maintain in force any insurance as required by this Section or to furnish any endorsements or other proof of insurance Franchisor requires hereunder, Franchisor may, in addition to all other available remedies, obtain
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Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, franchisees are required to obtain and maintain specific insurance policies, including public liability insurance with products/completed operations coverage and premises liability of no less than $1,000,000.00 per occurrence and $2,000,000.00 in the aggregate, along with bailee insurance. These policies must protect both the franchisee and Pearce Bespoke, naming Pearce Bespoke as an additional insured, and provide 30 days' prior written notice for any cancellations, amendments, or modifications. Franchisees must provide proof of insurance to Pearce Bespoke annually or upon request.
If a franchisee fails to maintain the required insurance or provide proof of it, Pearce Bespoke has the right to obtain the necessary insurance or endorsements. In such cases, the franchisee is obligated to promptly reimburse Pearce Bespoke for all insurance premiums and other costs incurred in obtaining the insurance or endorsements. This ensures that the franchise system maintains adequate protection, and that Pearce Bespoke can take action to mitigate risks associated with uninsured franchisees.
This requirement is fairly standard in franchising, as franchisors need to protect their brand and the entire franchise system from potential liabilities arising from individual franchisee operations. The franchisee's reimbursement obligation underscores the importance of maintaining continuous and adequate insurance coverage as mandated by Pearce Bespoke.