Under which section of the Internal Revenue Code has Bens Soft Pretzels elected to be taxed?

According to the 2025 FDD, Ben's Soft Pretzels has elected to be taxed under Section 1362 of the Internal Revenue Code. This means that Ben's Soft Pretzels operates as an S corporation. As a result, the company itself is not subject to corporate income taxes at the federal level. Instead, the shareholders of Ben's Soft Pretzels are taxed on their proportionate share of the company's taxable income. Therefore, the financial statements do not include a provision or liability for federal and state income taxes.

However, it's important to note that while the company avoids federal income taxes due to its S corporation status, certain states may not recognize this status for income tax purposes. For example, Ben's Soft Pretzels paid state taxes of $573 in 2024, $463 in 2023, and $210 in 2022. This implies that Ben's Soft Pretzels still has some state tax obligations despite its election under Section 1362.

For a prospective franchisee, this information indicates that Ben's Soft Pretzels' financial performance, as reflected in the financial statements, is not directly impacted by federal income taxes. The tax burden is passed on to the shareholders. However, franchisees should be aware that Ben's Soft Pretzels does incur some state tax expenses, which are reflected in the company's financial statements. Franchisees should consult with their own financial advisors to understand the full tax implications of investing in a Ben's Soft Pretzels franchise.