How does Big O Tires determine its income tax provision?

Based on the 2025 Big O Tires Franchise Disclosure Document, the document does not specify how Big O Tires determines its income tax provision. However, it does state that if any federal, state, or local tax other than an income tax is due or imposed upon the initial franchise fee or royalty fees paid by the franchisee to Big O Tires, and Big O Tires cannot offset these taxes against what it is required to pay under the laws of the United States or its domicile state, the franchisee must compensate Big O Tires. This compensation will be in a manner prescribed by Big O Tires to ensure that the net amount received by Big O Tires is no less than what was established by the agreement.

While the FDD does not detail the calculation of Big O Tires' income tax provision, it does emphasize the franchisee's responsibility for paying various taxes related to the operation of the franchised business. Franchisees are required to promptly pay all federal, state, and local taxes, including unemployment and sales taxes, related to the products and services they distribute or sell. They are also responsible for all debts incurred in operating the franchise.

Prospective franchisees should inquire with Big O Tires about the specifics of how the company handles income tax provisions and what financial reporting is required from franchisees to ensure tax compliance. Understanding these obligations is crucial for managing the financial aspects of the franchise effectively.