Under what circumstances is Buns On Fire required to collect taxes from the franchisee?
Buns_On_Fire Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisor shall have no liability for any sales, use, excise, gross receipts, property or other taxes, whether levied upon Franchisee, the Franchised Business or its assets, or upon Franchisor in connection with sales made, services performed or business conducted by Franchisee, except for any taxes Franchisor is required by law to collect from Franchisee with respect to purchases from Franchisor or for Franchisor's own income tax liability.
Source: Item 23 — RECEIPTS (FDD pages 49–200)
What This Means (2025 FDD)
According to the 2025 Buns On Fire Franchise Disclosure Document, the franchisor is not liable for taxes levied upon the franchisee or the franchisee's business, except in specific circumstances. Buns On Fire is required to collect taxes from franchisees with respect to purchases from the franchisor. The franchisor is also responsible for its own income tax liability.
This means that as a Buns On Fire franchisee, you are generally responsible for all taxes related to your business operations, including sales, use, excise, gross receipts, and property taxes. However, Buns On Fire will collect and remit sales tax on any purchases you make directly from them, such as initial inventory or ongoing supplies. This is a common practice in franchising, as franchisors often act as suppliers to their franchisees.
It is important for prospective franchisees to understand their tax obligations and to consult with a tax professional to ensure compliance with all applicable laws and regulations. This includes understanding which taxes you are responsible for paying directly and which taxes Buns On Fire is required to collect on behalf of the government.