What taxes, if any, must a Big O Tires franchisee reimburse to the franchisor?

According to Big O Tires' 2025 Franchise Disclosure Document, franchisees are required to reimburse Big O Tires for any taxes (excluding income taxes) that Big O Tires pays on the franchisee's royalty fees. This ensures that Big O Tires receives the full royalty amount as specified in the Franchise Agreement, without any reduction due to taxes.

This means that in addition to the royalty fees, a Big O Tires franchisee will also be responsible for covering the cost of any applicable taxes on those fees. These taxes are not the franchisee's income taxes, but rather any other taxes that Big O Tires incurs as a result of receiving royalty payments from the franchisee. The specific types and amounts of these taxes can vary depending on the jurisdiction and applicable tax laws.

For a prospective franchisee, this reimbursement obligation represents an additional cost to factor into their financial planning. It is important to understand what taxes might apply to the royalty fees in their specific location and to budget accordingly. Franchisees should consult with a financial advisor or tax professional to fully understand the potential tax implications of their royalty payments to Big O Tires.

Big O Tires retains the discretion to waive, credit, reduce, or defer any fees or charges, including this tax reimbursement, on a case-by-case basis. However, franchisees should not rely on this possibility and should instead plan to meet their reimbursement obligations as outlined in the Franchise Agreement.