Does the definition of 'Expenses' for Bhc franchises include taxes imposed on the indemnified person?
Bhc Franchise · 2025 FDDAnswer from 2025 FDD Document
in individual cases in our discretion.
- (2) "Gross Revenue" means the gross amount of revenue, whether for cash, by redemption of gift cards or certificates or for credit, regardless of collection, earned or received by you from any source in connection with the operation of the BHC Restaurant or with any similar or related activity, whether on or off your business premises, arising directly or indirectly from whatever source, including but not limited to sales from delivery or deliver services such as Door Dash, Uber Eats, Postmates, etc. Gross Revenue also includes any amount received from business insurance proceeds. "Gross Revenue" does not include: (i) the amount of any tax imposed by any governmental authority directly on sales and collected from customers, provided that the amount of any such tax is shown separately and is in fact paid by you to the appropriate governmental authority; (ii) the amount of any bona fide customer refunds; and (iii) tips or gratuities paid or payable to your employees.
- (3) Subfranchisees must pay us a Royalty Fee of 4.5% from Gross Revenues derived from the Subfranchised BHC Restaurants. The royalty you charge to Subfranchisees shall not exceed seven percent (7%) of Gross Revenues of Subfranchised BHC Restaurants.
- (4) Because your failure to comply with the obligations under your MFA may cause immediate and substantial damage to our interests and cause us to incur administrative and other expenses, we reserve the right to use the Deposit to compensate ourselves for such damage and expenses in certain situations. If we deduct any amount from the Deposit, you must replenish the Deposit to its original amount within 10 business days of each deduction.
- (5) "Actual Costs", as used in this Disclosure Document, include our then-current daily allowance, travel, meals, and boarding expenses for our staff per our then-current daily allowance policy.
Source: Item 23 — Receipts (FDD pages 52–230)
What This Means (2025 FDD)
Based on the 2025 Bhc Franchise Disclosure Document, the definition of 'Gross Revenue' does address taxes. Specifically, Gross Revenue does not include the amount of any tax imposed by any governmental authority directly on sales and collected from customers, provided that the amount of any such tax is shown separately and is in fact paid to you to the appropriate governmental authority. This means that Bhc franchisees do not have to pay royalties on sales tax they collect and remit to the government.
However, the FDD excerpt does not explicitly define 'Expenses' or detail whether 'Expenses' includes taxes imposed on an indemnified person. The document does state that the franchisee is responsible for paying all taxes imposed upon the franchisee or upon the franchisee's business or property. This implies that franchisees are responsible for their own tax obligations.
To fully understand whether specific taxes related to indemnification are considered 'Expenses' and how they are treated, a prospective Bhc franchisee should seek clarification from the franchisor. Specifically, they should ask for examples of what constitutes 'Expenses' and how indemnification claims and related tax implications are handled within the Bhc franchise system.