Under what circumstances will an Atwell Suites client be required to reimburse SCH for taxes paid?
Atwell_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
10 Taxes.
Any and all taxes, except income taxes of SCH, imposed or assessed by reason of this contract or its performance, including but not limited to sales or use taxes, shall be paid by Client. Client and SCH specifically agree that SCH is not an employee of Client. In the event foreign, federal, state or local taxes are assessed on the Services and SCH has paid for such taxes, Client shall promptly reimburse SCH for all such taxes except for those taxes based on the income of SCH, SCH employees, or personnel provided by SCH pursuant to this Agreement.
Source: Item 23 — Receipts (FDD pages 99–486)
What This Means (2025 FDD)
According to Atwell Suites's 2025 Franchise Disclosure Document, clients are responsible for reimbursing SCH (presumably, the parent company or a related entity) for certain taxes paid on their behalf. Specifically, if foreign, federal, state, or local taxes are assessed on the services provided by SCH, and SCH has already paid these taxes, the client must promptly reimburse SCH.
This reimbursement requirement does not extend to all taxes. The Atwell Suites franchisee is not responsible for reimbursing SCH for taxes based on SCH's income, or the income of SCH's employees or personnel provided under the agreement. This distinction clarifies that the franchisee is only responsible for taxes directly related to the services rendered to the hotel, not SCH's overall corporate income tax obligations.
This clause is fairly standard in franchise agreements, as it ensures that the franchisor is not burdened with unexpected tax liabilities arising from the franchisee's operations. However, it's crucial for a prospective Atwell Suites franchisee to understand the scope of this obligation and to factor potential tax reimbursements into their financial planning. It would be prudent to seek clarification from Atwell Suites regarding the types of services that may be subject to these taxes and to consult with a tax advisor to assess the potential financial impact.