What is the exception to the rule about paying taxes for a Buff City Soap franchisee?
Buff_City_Soap Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: Receipts]
Affiliates, whether either liability is matured or unmatured, is liquidated or unliquidated, or arises under this Agreement or any other Agreement between Franchisor or its Affiliates and Franchisee or its Affiliates.
- (k) Currency. All amounts payable by Franchisee to Franchisor under this Agreement will be in United States dollars.
- (l) Taxes. Any and all amounts expressed as being payable pursuant to this Agreement are exclusive of any applicable taxes. Franchisee is obligated to pay all federal, state and local taxes, including without limitation sales, use and other taxes, fees, duties and similar charges assessed against Franchisee. Franchisee is responsible for and must indemnify and hold Franchisor Indemnitees harmless against any penalties, Interest and expenses incurred by or assessed against Franchisor as a result of Franchisee's failure to withhold such taxes or to timely remit them to the appropriate taxing authority. Franchisee agrees to fully and promptly cooperate with Franchisor to provide any information or records it requests in connection with any application by Franchisor to any taxing authority with respect to Franchisee.
Source: Item 23 — Receipts (FDD pages 69–186)
What This Means (2025 FDD)
According to Buff City Soap's 2025 Franchise Disclosure Document, franchisees are generally responsible for paying all applicable federal, state, and local taxes, including sales, use, and other similar charges. The franchisee is also responsible for protecting Buff City Soap from any penalties or expenses if the franchisee fails to pay these taxes on time. However, the FDD excerpt does not state any exceptions to this rule. Therefore, franchisees are always expected to pay all applicable taxes.
This means that as a Buff City Soap franchisee, you must budget for and remit all required taxes to the appropriate authorities. Failure to do so could result in penalties and interest, for which you would be liable, and you would also have to cover any costs incurred by Buff City Soap due to your failure to pay. This is a standard practice in franchising, as franchisees are typically independent business owners responsible for their own tax obligations.
While the FDD excerpt specifies the franchisee's responsibility for taxes, it does not detail the types of taxes a Buff City Soap franchisee might encounter. It is important for prospective franchisees to consult with a tax professional to understand their specific tax obligations based on their location and business structure. This would include understanding sales tax collection and remittance, income tax, and any other local taxes or fees that may apply to the operation of a Buff City Soap makery.