Under what condition are Aw franchisees required to pay reimbursement of taxes?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE1,3 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| omissions, our enforcement of this Agreement, our defense of our actions taken under this Agreement or your breach of the Franchise Agreement. | |||
| Costs and Attorney's Fees | Will vary under circumstances | As incurred | You must reimburse us for costs and attorney's fees we incur in actions against you to enforce the Franchise Agreement. |
| Reimbursement for insurance costs | Costs and premiums incurred by us on your behalf. | Upon demand | Payable if we incur costs to purchase insurance for you if you fail to do so. |
| Reimbursement of Taxes | Actual assessed taxes against us for your operation of your business or on any payments you make to us. | Upon demand | Only payable if taxes of this type are assessed against us. |
| Software license fees | Undetermined since proprietary software has not yet been developed. | As arranged | Payable if we develop proprietary software that you must use for operating your Papa Ray's Pizza Restaurant. |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are required to reimburse Aw for taxes under a specific condition. Aw franchisees must reimburse Aw for the actual assessed taxes against Aw for the franchisee's operation of their business or on any payments the franchisee makes to Aw. This reimbursement is only payable if taxes of this type are assessed against Aw.
This means that if a taxing authority assesses taxes directly on Aw due to the franchisee's business operations or payments made to Aw, the franchisee is responsible for covering those tax expenses. This is in addition to any taxes the franchisee is directly responsible for paying, such as sales tax or income tax.
The reimbursement of taxes is due upon demand from Aw, meaning Aw will notify the franchisee when such taxes are assessed and require prompt payment. Franchisees should be aware of this potential liability and factor it into their financial planning. It is important to note that this tax reimbursement is not a fixed or guaranteed fee, but rather a contingent liability that arises only if specific taxes are assessed against Aw due to the franchisee's actions or payments.
This type of tax reimbursement clause is not uncommon in franchise agreements, as it protects the franchisor from unexpected tax liabilities arising from the operations of its franchisees. However, prospective Aw franchisees should carefully review this provision and understand the potential financial implications.