What happens if Carbones Pizzeria's uncertain tax positions do not have substantial support?

According to Carbones Pizzeria's 2025 Franchise Disclosure Document, the company only records the benefits of uncertain tax positions if it is more likely than not that the position will be upheld if challenged by tax authorities. If Carbones Pizzeria's uncertain tax positions do not have substantial support, the benefits of those positions will not be recorded.

Additionally, the document states that Carbones Pizzeria recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of October 31, 2022, the company had no accrued interest related to uncertain tax positions, and there were no accrued penalties for the year ended October 31, 2022. This suggests that Carbones Pizzeria aims to maintain tax positions that are likely to be supported upon examination, and any potential interest and penalties from uncertain positions are recorded as expenses.

For a prospective franchisee, this indicates that Carbones Pizzeria takes a conservative approach to income taxes, which can provide some assurance that the company is not taking aggressive tax positions that could lead to significant liabilities. However, it is important to note that tax laws and regulations can be complex and subject to interpretation, so it is advisable for potential franchisees to consult with their own tax advisors to fully understand the tax implications of investing in a Carbones Pizzeria franchise.