For an Aplus franchise, who is responsible for paying the increase in real and personal property taxes assessed upon any improvements, additions, or equipment made or installed by the franchisee?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
As it relates to the equipment purchased under the Funding Agreement, you, at your own cost and expense, shall (a) maintain the equipment in good repair and operating condition, (b) replace any equipment that is stolen, lost, destroyed or damaged beyond repair, which replacement equipment shall become our property, (c) replace any parts of the equipment which become worn out, lost, destroyed or damaged, which replacement parts shall become our property, (d) file the necessary tax returns and pay any property taxes associated with the equipment, and (e) obtain insurance coverage for the equipment as required by the terms of your agreement.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the franchisee is responsible for filing the necessary tax returns and paying any property taxes associated with equipment purchased under the Equipment and Construction Funding Agreement. This agreement, outlined in Attachment 7, allows Sunoco to provide funding to offset equipment and construction costs, paying invoices to third parties on the franchisee's behalf. The amount of funding depends on whether the Aplus store is newly constructed or a conversion.
Specifically, the franchisee bears the responsibility for filing tax returns and paying property taxes related to the equipment acquired through this funding. Additionally, the franchisee is obligated to maintain the equipment in good repair, replace any lost, stolen, or damaged equipment (which then becomes Sunoco's property), and replace worn-out parts.
This arrangement means that while Sunoco may provide initial funding for equipment and construction, the franchisee is ultimately responsible for the ongoing property tax obligations associated with that equipment. Prospective franchisees should consider these tax implications and consult with a tax advisor, as noted in the FDD, to fully understand the financial responsibilities related to the Equipment and Construction Funding Agreement.