Is the 1-800-GOT-JUNK? franchisee required to pay taxes on their gross sales?
1_800_Got_Junk Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 22 of the Franchise Agreement states that you will indemnify and hold us, and our subsidiaries, affiliates, shareholders, directors, officers, employees, agents, assignees and other franchisees; harmless against all liabilities, obligations, and consequential damages, taxes, costs, losses and actual legal expenses; any claim, litigation or other action or proceeding arising out of the operation of the franchised business.
However, you are not required to indemnify us for claims resulting solely from our breach of this Agreement or other wrongs we commit.
This provision may not be enforceable in Kansas unless separately negotiated and reasonable.
Source: Item 22 — Contracts (FDD page 24)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, 1-800-GOT-JUNK? franchisees may be responsible for taxes arising from the operation of their franchised business. Specifically, the Franchise Agreement includes a clause where the franchisee agrees to indemnify 1-800-GOT-JUNK? against various liabilities, including taxes. However, this indemnification requirement may not be enforceable in certain states like Kansas unless it is separately negotiated and deemed reasonable.
This means that a 1-800-GOT-JUNK? franchisee could be held responsible for covering 1-800-GOT-JUNK?'s liabilities, obligations, and damages, including taxes, that arise from the franchisee's business operations. However, the franchisee is not required to cover 1-800-GOT-JUNK?'s liabilities if they result solely from 1-800-GOT-JUNK?'s breach of the agreement or other wrongs committed by them.
Prospective franchisees should seek legal counsel to fully understand the implications of the indemnification clause, especially in their specific state. They should also inquire about what types of taxes they might be responsible for and under what circumstances they would be required to indemnify 1-800-GOT-JUNK?. Understanding these obligations is crucial for assessing the financial risks associated with the franchise.