For income tax purposes, how has Bambu elected to be treated?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the parties agrees to file its own tax, regulatory and payroll reports with respect to its respective employees and operations.
Notwithstanding any other provisions in this Agreement, Bambu shall not be responsible for supervising the activities of Franchisee's Bambū shoppe or ensuring that the Bambū shoppe is operated in compliance with applicable laws.
Franchisee shall conspicuously post a notice in the shoppe identifying the Franchised Location as being individually owned and operated by Franchisee.
- 20.2 Payment of Third Party Obligations.
Bambu shall have no liability for Franchisee's obligations to pay any third parties, including without limitation, any product vendors, or any sales, use, service, occupation, excise, gross receipts, income, property or other tax levied upon Franchisee, Franchisee's property, the Bambū shoppe or upon Bambu in connection with the sales made or business conducted by Franchisee (except any taxes Bambu is required by law to collect from Franchisee with respect to purchases from Bambu).
- 20.3 Indemnification.
Franchisee shall indemnify, defend and hold harmless Bambu, its subsidiaries, parents and affiliates, and their respective shareholders, directors, officers, managers, members, employees, agents, successors and assignees (the "Indemnified Parties"), against, and to reimburse them for all claims, obligations and damages described in this Section 20.3, any and all third party obligations described in Section 20.2 and any and all claims and liabilities directly or indirectly arising out of the operation of the Bambū shoppe or arising out of the use of the Marks and Bambū system in any manner not in accordance with this Agreement, including without limitation any claims alleging violations of any laws including labor and employment laws.
For purposes of this indemnification, claims shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties, including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel, lodging, and meal expenses.
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, both Bambu and its franchisees are considered independent businesspersons and are responsible for filing their own tax, regulatory, and payroll reports. This means that Bambu franchisees are not considered employees of Bambu but rather operate as separate entities.
Each Bambu franchisee is responsible for paying all applicable taxes related to their business, including sales, use, service, occupation, excise, gross receipts, income, and property taxes. Bambu will not be liable for these obligations, except for any taxes Bambu is legally required to collect from the franchisee related to purchases from Bambu.
This arrangement is typical in franchising, where franchisees operate as independent businesses. Prospective franchisees should consult with a tax advisor to understand their tax obligations and the implications of operating as an independent business owner.