Under what circumstances will Bor Restoration require franchisees to reimburse them for taxes?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
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- If your state assesses them, and except for our income taxes, you will reimburse us for all taxes we pay for products or services we furnish you, or on our collection of the IFF, the Royalties advertising contributions, or other fees. We will give you written notice if such a tax is levied and provide commercially reasonable proof of the tax calculation.
Source: Item 6 — Other Fees (FDD pages 10–15)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, franchisees are required to reimburse Bor Restoration for certain taxes under specific conditions. If a franchisee's state assesses taxes on products or services that Bor Restoration furnishes to the franchisee, or on Bor Restoration's collection of the Initial Franchise Fee (IFF), royalties, advertising contributions, or other fees (excluding Bor Restoration's income taxes), the franchisee must reimburse Bor Restoration for these taxes.
Bor Restoration will provide written notice to the franchisee if such a tax is levied. This notice will also include commercially reasonable proof of how the tax was calculated. This means that Bor Restoration is responsible for demonstrating the legitimacy and accuracy of the tax amount being charged to the franchisee.
This reimbursement requirement ensures that Bor Restoration does not bear the burden of taxes assessed by a franchisee's state on the specified fees and services. It is a fairly standard practice in franchising for franchisees to cover these types of state-level taxes, as they are directly related to the franchisee's operations and revenue generation within that state. Franchisees should be aware of potential state tax obligations and factor them into their financial planning.