How is the required business interruption insurance amount calculated for a Pump It Up franchise?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
00 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 wheth
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 25–29)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, franchisees must maintain business interruption insurance adequate for a six-month period. This insurance coverage must include payments to Pump It Up of continuing royalties. The royalty payments are based on the average of the franchisee's past three operating months.
This requirement ensures that Pump It Up continues to receive royalty payments even if the franchise location is temporarily closed due to unforeseen circumstances. For a prospective franchisee, this means factoring in the cost of business interruption insurance that covers royalty payments into their operating budget. The franchisee should consider that the cost of this insurance will fluctuate based on their sales performance over the prior three months.
Pump It Up also recommends that franchisees obtain sexual and physical abuse coverage with limits of no less than $50,000 per occurrence. Franchisees should verify with their own risk management advisor whether they should purchase any additional insurance coverage above and beyond the six categories identified by Pump It Up.