Who is responsible for paying sales taxes on fees under the Bevaris Alliance agreement?

According to the 2024 Bevaris Alliance Franchise Disclosure Document, the franchisee is responsible for paying sales taxes on all fees due under the franchise agreement. The fees outlined in the agreement are exclusive of sales tax or similar taxes. Where applicable, the franchisee must pay these taxes at the prevailing rate on the due date for payment or receipt of the relevant invoice from Bevaris Alliance.

This means that when Bevaris Alliance invoices a franchisee for any fees, such as the initial franchise fee, royalty fees, or any other charges, the stated amount does not include sales tax. The franchisee is obligated to calculate and remit the appropriate sales tax to the relevant tax authorities in addition to the fee itself. This is a standard practice in franchising, as sales tax laws vary by state and locality, making it simpler for the franchisor to set fees exclusive of these taxes and place the onus on the franchisee to handle the tax obligations.

Prospective Bevaris Alliance franchisees should factor in these sales tax obligations when budgeting for their initial investment and ongoing operational costs. They should consult with a tax advisor to understand the specific sales tax requirements in their location and ensure they comply with all applicable laws and regulations. Failing to properly account for and remit sales taxes can result in penalties and legal issues, so it is crucial for franchisees to manage this aspect of their business diligently.