According to Aw's accounting policies, to whom does income and expenses pass through?

According to Aw's 2025 Franchise Disclosure Document, the company has elected to be taxed as a limited liability corporation for federal and state income tax purposes. This means that the income and expenses of the company pass through directly to the members and are reported on their individual income tax returns.

This pass-through taxation structure is common for LLCs and S corporations, where the business itself does not pay corporate income tax. Instead, the profits and losses are passed on to the owners (members in the case of an LLC), who then report them on their personal income tax returns. This can be advantageous for franchisees as it avoids double taxation, which occurs when a corporation pays taxes on its profits, and then shareholders pay taxes again on dividends received.

For a prospective Aw franchisee, this means that the profits or losses from their franchise will be included in their personal income tax calculations. They will need to consider this when planning their financial strategy and ensure they set aside sufficient funds to cover their tax obligations. It is advisable for franchisees to consult with a tax professional to understand the implications of this pass-through taxation and how it will affect their individual tax situation.

It's important to note that while the FDD specifies that Aw is taxed as an LLC, franchisees should confirm this information with the franchisor and their own tax advisor, as tax laws and business structures can have complex implications. Understanding this aspect of the franchise is crucial for managing personal and business finances effectively.