What recourse does Pearce Bespoke have if a franchisee fails to maintain the required insurance?
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 must maintain specific insurance coverage, including public liability insurance with products/completed operations coverage and premises liability of at least $1,000,000 per occurrence and $2,000,000 in the aggregate. They must also have bailee insurance for consignment goods and other insurance types and amounts that Pearce Bespoke may reasonably require. These policies must protect both the franchisee and Pearce Bespoke, requiring the insurer to defend both in any action, and Pearce Bespoke must be named as an additional insured. The insurance policy cannot be canceled, amended, or modified without thirty days' prior written notice to Pearce Bespoke. Franchisees must provide annual proof of insurance upon request.
If a Pearce Bespoke franchisee fails to maintain the required insurance or provide proof of it, Pearce Bespoke has the right to obtain the necessary insurance or endorsements themselves. The franchisee is then responsible for promptly reimbursing Pearce Bespoke for all insurance premiums and other costs incurred in obtaining the insurance or endorsements. This is in addition to any other remedies Pearce Bespoke may have available.
This requirement ensures that both the franchisee and Pearce Bespoke are protected from potential liabilities. By allowing Pearce Bespoke to obtain insurance on behalf of a non-compliant franchisee, the franchise system maintains its protection and avoids potential disruptions to the business. The franchisee's responsibility to reimburse Pearce Bespoke for these costs underscores the importance of maintaining the required insurance coverage. This is a fairly standard clause in franchise agreements, as franchisors need to protect their brand and avoid liability from franchisee actions.