How does Chesters treat sales tax collected from customers in its financial statements?

According to Chesters's 2025 Franchise Disclosure Document, sales tax collected from customers is not included in revenue. Instead, Chesters records it as a liability that is due to the respective taxing authorities.

For a prospective Chesters franchisee, this means that the revenue figures reported in Chesters's financial statements do not include sales tax. The franchisee is responsible for collecting sales tax from customers and remitting it to the appropriate government agencies. The sales tax collected is held as a liability on the franchisee's balance sheet until it is paid to the taxing authorities.

This accounting treatment is standard practice, as sales tax is collected on behalf of the government and does not represent income for the business. Franchisees should ensure they have systems in place to accurately track and remit sales tax to avoid penalties.