Under what condition must a Buona franchisee reimburse the franchisor for taxes?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
18.1 Taxes. Franchisee shall promptly pay when due all taxes, accounts and other indebtedness of every kind incurred by Franchisee in the conduct of the Franchised Business under this Agreement. Franchisor will have no liability for any sales, use, excise, income, gross receipts, property, or other taxes levied against Franchisee or the Franchised Business or on Franchisor in connection with your operation of the Franchised Business, or any payments Franchisee makes to Franchisor pursuant to this Agreement, including but not limited to royalties and advertising fund contributions (except for Franchisor's own income taxes). If any such taxes are assessed against Franchisor, Franchisee shall reimburse
Franchisor the actual amount of the taxes upon demand and upon receipt of proof of tax assessment.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee is responsible for promptly paying all taxes, accounts, and indebtedness incurred while conducting business. Buona will not be held liable for any taxes levied against the franchisee or the franchised business. This includes sales, use, excise, income, gross receipts, property, or other taxes related to the franchisee's operations or payments made to Buona, such as royalties and advertising fund contributions, with the exception of Buona's own income taxes.
Specifically, if any of the aforementioned taxes are assessed against Buona due to the franchisee's operation, the franchisee is obligated to reimburse Buona for the actual amount of the taxes. This reimbursement is required upon demand from Buona and after the franchisee receives proof of the tax assessment.
This condition means that if a taxing authority determines that Buona owes taxes as a result of a franchisee's business activities, the franchisee must cover those tax liabilities. It is important for prospective Buona franchisees to understand this potential financial responsibility and to ensure they maintain accurate records and comply with all applicable tax laws to minimize the risk of triggering such a reimbursement obligation.