What taxes is a Carls Jr. franchisee responsible for regarding the licensing of the Licensed Program and Content?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.2 Taxes. Licensee shall be responsible for any applicable sales or use taxes or any value added or similar taxes payable with respect to the licensing of the Licensed Program and Content, or arising out of or in connection with this Agreement, other than taxes levied or imposed based upon Licensor's income. In the event that Licensor pays any such taxes on behalf of Licensee, Licensor shall invoice Licensee for such taxes and Licensee agrees to pay such taxes within 30 days from the date of invoice.
Source: Item 23 — RECEIPTS (FDD pages 76–364)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, franchisees are responsible for specific taxes related to licensing the Licensed Program and Content. Specifically, the franchisee must pay any applicable sales, use, or value-added taxes associated with licensing the Licensed Program and Content, as well as any taxes arising from or connected to the agreement itself. However, the franchisee is not responsible for taxes levied or imposed based upon the Licensor's income.
If Carls Jr. (referred to as Licensor in this context) pays any of these taxes on behalf of the franchisee (Licensee), Carls Jr. will invoice the franchisee for the amount. The franchisee is then obligated to pay these invoiced taxes within 30 days from the invoice date.
This arrangement is fairly standard in franchising, where franchisees typically bear the responsibility for taxes related to their specific operations and licensed content. Franchisees should ensure they understand their local and state tax obligations and factor these costs into their financial planning. Failing to pay these taxes can result in penalties and interest charges, as detailed elsewhere in the agreement.