What taxes is the Big Apple Bagels franchisor not liable for that are levied upon the developer?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor shall have no liability for any sales, use, excise, income, gross receipts, property, or other taxes levied upon Developer or its assets or upon Franchisor in connection with the business conducted by Developer, or any payments made by Developer to Franchisor pursuant to this Agreement or any Franchise Agreement. Developer agrees to indemnify Franchisor and its subsidiaries, affiliates, stockholders, directors, officers, employees, agents and assignees against and to reimburse them for all such obligations, damages, and taxes for which they are held liable and for all costs reasonably incurred by them in the defense of any such claim brought against them or in any action in which they are named as a party, including without limitation reasonable attorneys' and expert witness fees, cost of investigation and proof of facts, court costs, other litigation expenses, and travel and living expenses. Franchisor shall have the right to defend any such claim against it. The indemnities and assumptions of liabilities and obligations herein shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 87–319)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, Big Apple Bagels is not liable for specific taxes levied upon the developer. These taxes include sales, use, excise, income, gross receipts, property, or other taxes. This applies to taxes levied either on the developer or its assets, or on Big Apple Bagels itself in connection with the developer's business operations. It also covers any payments the developer makes to Big Apple Bagels under the Area Development Agreement or any Franchise Agreement.
Furthermore, the developer is obligated to indemnify Big Apple Bagels and its related parties (subsidiaries, affiliates, etc.) against all such tax obligations, damages, and related costs. This indemnification includes covering all expenses reasonably incurred in defending against any claims, such as attorney's fees, expert witness fees, investigation costs, court costs, and travel expenses.
This section of the FDD clarifies the financial responsibilities of the developer and Big Apple Bagels, ensuring that the developer is aware of their tax obligations and the requirement to protect Big Apple Bagels from any tax-related liabilities arising from the developer's business. This is a common provision in franchise agreements to clearly delineate financial responsibilities between the franchisor and franchisee.