What is the exception to Beauty Bungalows terminating the agreement if the franchisee fails to pay taxes?

According to Beauty Bungalows' 2025 Franchise Disclosure Document, Beauty Bungalows can terminate the franchise agreement if the franchisee fails to pay income, service, sales, or other taxes when due on the franchise's operations. However, there is an exception to this rule. Beauty Bungalows will not terminate the agreement if the franchisee is in good faith contesting its liability for such taxes and has effectively stayed the enforcement of liability for such taxes.

This means that if a Beauty Bungalows franchisee has a legitimate dispute regarding their tax obligations and is actively challenging those obligations through appropriate legal channels, and has managed to prevent the tax authorities from enforcing the tax liability while the dispute is ongoing, Beauty Bungalows will not terminate the franchise agreement. This provision protects franchisees from immediate termination in cases where they have a reasonable basis to contest a tax assessment.

For a prospective Beauty Bungalows franchisee, this clause offers some security. It acknowledges that tax disputes can arise and provides a mechanism to avoid termination as long as the franchisee is acting in good faith and taking appropriate steps to resolve the issue. However, it's crucial for franchisees to understand that merely disagreeing with a tax assessment is not enough. They must actively contest the liability and obtain a stay of enforcement to be protected under this provision.