Is Basecamp Fitness liable for any taxes arising out of the operation of a franchisee's Basecamp Fitness studio?
Basecamp_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
and specifications we require.
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- THOUGH APPROVED BY US, WE AND OUR AFFILIATES MAKE NO WARRANTY AND EXPRESSLY DISCLAIM ALL WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS FOR ANY PARTICULAR PURPOSE, WITH RESPECT TO FIXTURES, FURNITURE, EQUIPMENT (INCLUDING WITHOUT LIMITATION ANY AND ALL REQUIRED COMPUTER SYSTEMS), SUPPLIES, INVENTORY OR OTHER APPROVED ITEMS.
- S. Taxes on Fees. If your state, or any governmental body in your state, charges a tax on any fee you owe to us or to our affiliates, then you are required to pay an additional amount equal to the amount of this tax. (For purpose of clarification, this does not apply to any federal or Minnesota income taxes that we or our affiliates must pay.)
- T. National and Regional Accounts. We, or others acting on our behalf, may from time to time solicit companies or organizations to offer fixed pricing packages to their employees. You will have the right to participate in, and receive the benefits of, all such programs we establish with companies or organizations that have employees in your market.
- U. Participation in Programs; Reciprocity. You must honor and participate in all member programs, national campaigns, member/customer loyalty, reward, gift card, service packages, member challenges, and other promotional programs we require. In addition, you agree to abide by any reciprocity policy we may establish as modified from time to time. Such policy will likely prohibit you from selling any service packages or other offers that do not provide full reciprocity benefits to your members with other Basecamp Fitness studios, and require you to honor service packages and other approved offers sold by other Basecamp Fitness studios. We require you to participate in reciprocity programs we may specify and you are not compensated if a member from another location uses your Basecamp Studio. All memberships and products must comply with our pricing guidelines.
10. CONFIDENTIAL INFORMATION/IMPROVEMENTS
A. You acknowledge that all the information you have now or obtain in the future concerning the System and the concepts and methods of promotion franchised hereunder is derived from us pursuant
to this Agreement, and that you will treat such information in confidence. You agree never to, directly or indirectly, engage in or abet the misappropriation (as the term "misappropriation" is defined in the Minnesota Uniform Trade Secrets Act), or the disclosure, divulgence, or distribution of all or any part of the System and the concepts and methods of promoting franchises hereunder. You will disclose such confidential information only to such of your employees as must have access to it in order to operate your Basecamp Studio and use it only for the operation of your Basecamp Studio. At our request, you must deliver to us confidentiality agreements and non-compete agreements in a form satisfactory to us signed by your owners and the spouses of your owners. All of your managers must sign confidentiality agreements. The scope of the confidentiality agreements shall be consistent with the provisions of this Section 10.A, and the scope of the noncompete agreements shall be consistent with the provisions of Section 17 of this Agreement. For the avoidance of doubt, you may not use any such confidential information for the purpose of machine learning, augmented human intelligence development, training any artificial intelligence ("AI") model, algorithm improvement, or similar data aggregation activities without our express written consent. Such uses shall not be deemed related to the performance of this Agreement and are expressly prohibited. You shall not, without our prior written consent, input any such confidential information into any generative AI platform, or disclose such information to any provider or source of generative AI services. You shall opt out of allowing any provider or source of generative AI to utilize confidential information for training of any AI model or for other purposes.
- B.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to Basecamp Fitness's 2025 Franchise Disclosure Document, franchisees are generally responsible for all losses, costs, and expenses arising from the operation of their Basecamp Studio. Basecamp Fitness will not be obligated for any damages to any person or property directly or indirectly arising out of the operation of the franchisee's Basecamp Studio. The franchisee assumes sole and complete responsibility for, and will defend and indemnify Basecamp Fitness and its affiliates against, all losses, costs, expenses, obligations, damages, and liabilities (including defense costs) arising directly or indirectly out of the development or operation of their Basecamp Studio. This includes, without limitation, claims relating to the franchisee's employment practices, equipment selection, and floor plan, the franchisee or their employees' actions or inactions, and any amounts Basecamp Fitness pays on the franchisee's behalf.
Furthermore, if a state or any governmental body in the franchisee's state charges a tax on any fee the franchisee owes to Basecamp Fitness or its affiliates, the franchisee is required to pay an additional amount equal to the amount of this tax. However, this does not apply to any federal or Minnesota income taxes that Basecamp Fitness or its affiliates must pay.
This arrangement is typical in franchising, where franchisees operate as independent contractors and bear the primary responsibility for their business's financial and legal obligations. Franchisees should consult with a financial advisor and legal counsel to fully understand their tax obligations and liabilities when operating a Basecamp Fitness franchise.