Who is responsible for all withholding taxes related to payments to Chatime?
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 related to payments made to Chatime. This means that when a franchisee makes payments to Chatime, they must handle any required deductions or withholdings for taxes, unless prohibited by law.
If the franchisee is legally prevented from making these deductions, they must increase the payment amount to ensure Chatime receives the full amount it would have received had no deductions been made. The franchisee is also obligated to remit the full amount of the deduction or withholding to the appropriate tax authority within the legally mandated timeframe.
Furthermore, the franchisee must provide Chatime with an official receipt from the tax authority within 7 days of receiving it, serving as proof of payment of the withheld taxes. The franchisee is also required to assist Chatime with any reasonable requests for information or supporting documents related to the calculation and payment of the withheld amounts. This ensures Chatime receives the correct net payment and that all tax obligations are properly handled.