Are Pump It Up franchisees responsible for the expense of obtaining and maintaining the required insurance?

designate different PIU Vendors to supply all or certain components of the Start Up Package.

Insurance

Before you commence activities under the Franchise Agreement, and before the Franchised Business opens, you must obtain at your sole expense, and continue to maintain in full force and effect at all times, certain insurance for liabilities caused by or occurring in connection with the development or operation of the Franchised Business. This insurance coverage must include, at a minimum, insurance policies of the kinds required by the Manuals and in the amounts required by the Manuals.

The current minimum requirements for insurance policies and coverage include: (1) comprehensive general liability insurance with limits of the greater of (i) $1,000,000 per occurrence and $2,000,000 aggregate; or (ii) those amounts required by the state or local government in which your Franchised Business is located; (2) worker's compensation and employer's liability insurance, as well as such other insurance as may be required by statute or rule of the state in which the Franchised Business is located and operated; (3) employment benefits liability coverage; (4) automobile liability insurance, and property damage liability, including owned, non-owned, and hired vehicle coverage, with at least $1,000,000 combined single limit, and $2,000,000 general aggregate limit; (5) guaranteed or extended cost replacement

property insurance (and contingent liability and building ordinance coverage if you or an entity controlled by you own the building in which the Franchised Business is operated) on building and business personal property including personal property of others; and (6) business interruption insurance adequate for a six month period including the payments to us of our continuing royalty based on the average of your past three operating months. We also recommend that you obtain sexual and physical abuse coverage with limits of no less than $50,000 per occurrence. You should verify with your own risk management advisor whether you should purchase any additional insurance coverage above and beyond the six categories identified above.

All insurance policies must be written by an insurance company that is licensed in the state where your Franchised Business is located. All insurance policies must also meet our minimum standards and specifications as provided here in the FDD, in your Franchise Agreement, in the Manuals, or otherwise stated to you in writing. We may from time to time increase the minimum required coverage and/or modify or require different or additional insurance coverage (including an additional umbrella liability insurance policy) at any time to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances. We will provide you with written notice of such modifications and you must take prompt action to secure the additional coverage or higher policy limits. All insurance policies must name us and any affiliates we designate as additional named insureds and provide for 30 days' prior written notice to us of a policy's material modification, cancellation or expiration.

Each insurance policy you obtain shall be specifically endorsed to provide that the coverage shall be primary and that any insurance carried by any additional insured shall be excess and non-contributory. At least 10 days prior to commencing construction of the Franchised Business or 3 days before taking ownership of an existing open Pump It Up Franchised Business, and annually thereafter, you must submit to us a copy of all of your Certificates of Insurance or other evidence that you are maintaining this insurance coverage and paying premiums. If you obtain claims-made insurance policies, you must obtain tail coverage for at least four years after the end of any policy period in question or as otherwise set forth in your Franchise Agreement, the Manuals, or provided to you in writing. If you fail or refuse to obtain and maintain the insurance we specify, in addition to our other remedies, we may obtain such insurance for you and the Franchised Business. If we obtain insurance for you due to your failure or refusal to obtain or maintain the required insurance, or your failure or refusal to provide us with adequate evidence of holding such required insurance, you must cooperate with us and reimburse us for all premiums, costs and expenses we incur in obt

Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)