Under what circumstances does a Buildingstars franchisee have to indemnify or reimburse Buildingstars and its affiliates for taxes and assessments?

According to Buildingstars's 2025 Franchise Disclosure Document, a franchisee must indemnify or reimburse Buildingstars and its affiliates for specific taxes and assessments. This obligation arises for all capital, gross receipts, sales, and other taxes and assessments imposed by any applicable state or local governmental authority. This is triggered when these financial impositions result from either the franchisee's business operations or from the licensing of any of Buildingstars' or its affiliates' intangible property to the franchisee. This requirement applies whether Buildingstars or its affiliates are required to pay these taxes directly, or if the franchisee withholds them, or through any other mechanism.

However, the franchisee's responsibility to indemnify or reimburse Buildingstars and its affiliates does not extend to income-type taxes. These are taxes that a state or local government imposes on Buildingstars' or its affiliates' income. Therefore, the franchisee is only responsible for taxes and assessments directly related to the business's operation or the use of Buildingstars' intangible property, but not for taxes on Buildingstars' profits.

This clause ensures that Buildingstars is protected from tax liabilities arising from the franchisee's activities or the franchisee's use of Buildingstars' intellectual property. It is a fairly standard practice in franchising to ensure the franchisor is not held liable for the franchisee's tax obligations related to their specific business operations. Prospective franchisees should understand this obligation and factor it into their financial planning, ensuring they are prepared to cover these potential tax liabilities.