Is procuring insurance coverage a requirement for developing a Pump It Up Franchised Business?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) procure insurance coverage for your activities under this Agreement as required by Section 12.L. and the Manuals;
(1) You will be responsible for any and all loss or damage arising from or related to your development and operation of the Franchised Business, and for all demands or claims with respect to any loss, liability, personal injury, death, property damage, or expense whatsoever occurring upon the Premises, or in connection with the development and/or operation of the Franchised Business. Throughout the term of this Agreement, you must obtain and maintain in full force and effect that insurance which you determine is necessary or appropriate for liabilities caused by or occurring in connection with the development or operation of the Franchised Business, which shall include, at a minimum, insurance coverage in the amounts and covering the risks we periodically specify in the Manuals or otherwise in writing. Our minimum insurance requirements are not representations or warranties that such coverage is sufficient for the operation of your Franchised Business. Our requirements only represent the minimum coverage for your Franchised Business that we deem acceptable to protect our interests. Our current minimum insurance requirements are as follows:
(a) comprehensive general liability insurance with limits of the greater of (i) $1,000,000 per occurrence and $2,000,000 aggregate; and (ii) those amounts required by the state or local government in which your Franchised Business is located;
(b) 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;
(c) employment practices liability coverage;
(d) 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;
(e) 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
(f) 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.
(2) In addition to the foregoing, we also recommend, but do not require, that you obtain sexual and physical abuse insurance coverage with limits of not less than $50,000 per occurrence.
(3) All insurance policies must be written by an insurance company that is licensed in the state where the Franchised Business is located, and must meet our minimum standards and specifications as set forth in this Agreement, the Manuals or otherwise stated to you in writing.
(3) All insurance policies must be written by an insurance company that is licensed in the state where the Franchised Business is located, and must meet our minimum standards and specifications as set forth in this Agreement, the Manuals or otherwise stated to you in writing.
We may periodically increase the minimum required coverage and/or modify or require different or additional insurance coverage (including reasonable excess liability insurance) 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.
You will receive written notice of such modifications and shall take prompt action to secure the additional coverage or higher policy limits.
All insurance policies must name us and any affiliates that we designate and our and their respective officers and owners 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 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.
- (4) At least 10 days prior to commencing construction of the Franchised Business (or, if you are acquiring an existing Pump It Up Business, 10 days prior to the transfer of ownership interests) and annually thereafter, you must submit to us a copy of your Certificates of Insurance or other evidence of you maintaining the required insurance coverage and paying those premiums. If you obtain claims-made insurance policies, we require that you obtain tail coverage for at least four years after the end of any policy period in question or as otherwise set forth in the Manuals or provided to you in writing. If you fail or refuse to obtain and maintain the insurance we specify and/or fail or refuse to provide us with satisfactory evidence of those policies being in place, in addition to our other remedies, we may (but need not) obtain such insurance for you and the Franchised Business on your behalf, in which event you must cooperate with us and reimburse us for all premiums, costs and expenses we incur in obtaining and maintaining the insurance, plus a reasonable fee for our time spent in obtaining such insurance.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, securing insurance coverage is a requirement for franchisees. Specifically, franchisees must "procure insurance coverage for your activities under this Agreement as required by Section 12.L. and the Manuals." This indicates that maintaining adequate insurance is not merely suggested but is a mandatory aspect of operating a Pump It Up franchise.
The FDD outlines minimum insurance requirements, including comprehensive general liability insurance with limits of the greater of $1,000,000 per occurrence and $2,000,000 aggregate, or those amounts required by the state or local government. Additionally, franchisees must carry worker's compensation and employer's liability insurance, employment practices liability coverage, automobile liability insurance with specified limits, guaranteed or extended cost replacement property insurance, and business interruption insurance adequate for a six-month period covering royalty payments. Pump It Up also recommends, but does not require, that franchisees obtain sexual and physical abuse insurance coverage with limits of not less than $50,000 per occurrence.
Pump It Up retains the right to periodically increase the minimum required coverage or modify insurance requirements to reflect inflation, new risks, changes in law, or higher damage awards. Franchisees will receive written notice of such changes and must promptly secure the additional coverage. Furthermore, all insurance policies must name Pump It Up and its affiliates as additional insureds and provide 30 days' prior written notice of any material modification, cancellation, or expiration. Franchisees must provide Pump It Up with copies of certificates of insurance at least 10 days before commencing construction (or transfer of ownership) and annually thereafter.
Failure to maintain the specified insurance coverage can lead to Pump It Up obtaining the insurance on the franchisee's behalf, with the franchisee responsible for reimbursing all premiums, costs, and expenses incurred by Pump It Up, plus a reasonable fee. This underscores the importance of adhering to the insurance requirements to avoid potential financial burdens and maintain compliance with the franchise agreement. The franchisee is responsible for any and all loss or damage arising from the development or operation of the franchised business.