What assistance is a Chatime franchisee obligated to provide to the franchisor regarding the calculation and payment of any withheld amounts?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
6.7 Withholding
- (1) All withholding taxes shall be borne by Franchisee. That is to say, all payments by Franchisee must be made without deduction or withholding (including, without limitation, by way of set-off, counterclaim, duty, tax (including goods and services tax, value added tax, and other government imposts) or charge) unless Franchisee is prohibited by law from doing so, in which case Franchisee must:
- (a) Promptly pay to Franchisor any additional amount necessary to ensure that the net amount received by Franchisor equals the full amount which would have been received by Franchisor if no deduction or withholding had been made;
- (b) Pay to the relevant authority within the period for payment permitted by law the full amount of the deduction or withholding (including the full amount of any deduction or withholding from any additional amount paid under clause 6.7(1)(a));
- (c) Give Franchisor the official receipt from the authority for the amount paid to it within 7 days after Franchisee receives it; and
- (d) Assist Franchisor with any reasonable requests for information or supporting documents regarding the calculation and/or payment of the amount paid.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, the franchisee is responsible for all withholding taxes. This means that all payments made by the franchisee to Chatime must be without any deductions or withholdings, including set-offs, counterclaims, duties, taxes like GST or VAT, or other government charges. However, if the franchisee is legally obligated to make such deductions or withholdings, they must take specific actions to ensure Chatime receives the full amount due.
Specifically, the franchisee must promptly pay Chatime any additional amount necessary to ensure that the net amount Chatime receives equals the full amount they would have received if no deduction or withholding had been made. The franchisee must also pay the full amount of the deduction or withholding to the relevant authority within the legally permitted time frame, including any deduction or withholding from additional amounts paid to Chatime to cover the initial withholding.
Furthermore, the franchisee is obligated to provide Chatime with the official receipt from the relevant authority for the amount paid within 7 days of receiving it. Finally, the franchisee must assist Chatime with any reasonable requests for information or supporting documents related to the calculation and payment of the withheld amount. This ensures that Chatime can properly account for and reconcile any withheld amounts with the relevant authorities.