What recourse does the Bumper Man franchisee have if they are contesting their tax liability in good faith?
Bumper_Man Franchise · 2025 FDDAnswer from 2025 FDD Document
- (xiii) Franchisee fails to pay when due any income, withholding, service, sales or any other applicable taxes due on the Bumper Business' operations, unless it is in good faith contesting its liability for such taxes and has effectively stayed the enforcement of liability for such taxes.
Source: Item 23 — RECEIPTS (FDD pages 45–180)
What This Means (2025 FDD)
According to the 2025 Bumper Man Franchise Disclosure Document, a franchisee will not necessarily be in default if they fail to pay income, withholding, service, sales, or other applicable taxes related to their Bumper Business operations, provided they are contesting the tax liability in good faith.
Specifically, Bumper Man will not terminate the Franchise Agreement if the franchisee is in good faith contesting their liability for such taxes and has effectively stayed the enforcement of liability for such taxes. This means the franchisee must be actively disputing the tax assessment through proper legal channels and has managed to prevent the tax authorities from taking immediate action to collect the disputed amount.
This clause protects the franchisee from immediate termination if a tax dispute arises, offering them an opportunity to resolve the issue without jeopardizing their franchise. However, it is critical that the franchisee genuinely contests the liability and obtains a stay of enforcement; otherwise, failure to pay taxes when due could still lead to termination of the Bumper Man Franchise Agreement.