How is tax liability shared among Batteries Plus Bulbs franchisees in the same jurisdiction?
Batteries_Plus_Bulbs Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges and agrees that it is responsible for the payment of all income, capital, gross receipts, sales and other taxes arising out of or related to Franchisee's operation of the Store and will indemnify Franchisor and reimburse Franchisor for all such taxes that any jurisdiction (federal, state or local) in which the Store is located imposes as a result of Franchisee's operation of the Store or the license of any of Franchisor's intangible property in the jurisdiction in which the Store is located.
If more than one Batteries Plus® franchisee is located in such jurisdiction, they will share the liability in proportion to their Net Revenues from the franchised business, except in the case of sales taxes and gross receipts taxes, which will be divided in proportion to taxable sales to the franchisees.
Source: Item 22 — Contracts (FDD page 80)
What This Means (2025 FDD)
According to Batteries Plus Bulbs' 2025 Franchise Disclosure Document, franchisees are responsible for all taxes related to the operation of their store. This includes income, capital, gross receipts, sales and other taxes imposed by federal, state, or local jurisdictions. Franchisees must also indemnify Batteries Plus Bulbs and reimburse them for any such taxes that the jurisdiction imposes due to the franchisee's operation or the licensing of Batteries Plus Bulbs' intangible property. This means a franchisee could be responsible for covering Batteries Plus Bulbs' tax liabilities if they arise from the franchisee's actions.
If there are multiple Batteries Plus Bulbs franchisees in the same jurisdiction, they will share the tax liability. The general tax liability is shared in proportion to their Net Revenues from the franchised business. However, sales taxes and gross receipts taxes are divided in proportion to the taxable sales to each franchisee. This distinction indicates that different types of taxes are allocated based on different metrics, reflecting the nature of the tax itself.
This tax indemnification clause is a standard practice in franchising, designed to protect the franchisor from liabilities arising from the franchisee's business operations. However, it places a significant responsibility on the franchisee to ensure compliance with all applicable tax laws and regulations. Prospective franchisees should consult with a tax professional to fully understand their tax obligations and potential liabilities before entering into a franchise agreement with Batteries Plus Bulbs.