Is a Cicis franchisee allowed to deduct any taxes from payments made to the franchisor?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
12. DEBTS AND TAXES
- A. Payment of Taxes and Other Obligations. You will promptly pay when due all Taxes (as defined below), levied or assessed, and all accounts and other indebtedness of every kind incurred by you in connection with your activities under this Agreement. Each payment to be made to use hereunder will be made free and clear and without deduction for any Taxes. "Taxes" means any present or future taxes, levies, imposts, duties or other charges of whatsoever nature, including any interest or penalties thereon, imposed by any government or political subdivision of such government on or relating to the conduct of your activities under this Agreement, the payment of monies, or the exercise of rights granted pursuant to this Agreement, except Taxes imposed on or measured by our net income.
- B. Disputed Liability. In the event of any bona fide dispute as to your liability for Taxes assessed or other indebtedness, you may contest the validity or the amount of the Tax or indebtedness in accordance with the procedures of the taxing authority or applicable Law. However, in no event will you permit a tax sale or seizure by levy of execution or similar writ or warrant or attachment by a creditor to occur against the premises of your Restaurant or any improvements thereon.
- C. Credit Standing. You recognize that your failure to make payments or repeated delays in making prompt payments under or in accordance with the terms of agreements, invoices, and other statements for purchases of products or services will result in a loss of credit rating or standing which will be detrimental
to the goodwill associated with the Marks and the System. Except for payments which are disputed by you in good faith, you will promptly pay when due all amounts you owe us, our affiliates, and other suppliers.
Source: Item 22 — CONTRACTS (FDD pages 64–65)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, franchisees are required to make payments to Cicis free and clear of any tax deductions. Franchisees are responsible for promptly paying all taxes, levies, and other charges related to their activities under the Franchise Agreement. The term "Taxes" includes any present or future taxes, levies, imposts, duties, or other charges imposed by any government on the franchisee's activities, payments, or rights granted under the agreement. However, this excludes taxes imposed on or measured by Cicis's net income.
If a Cicis franchisee has a legitimate dispute regarding tax liability, they can contest the tax amount or validity through the appropriate procedures. However, the franchisee cannot allow a tax sale or seizure of the restaurant premises due to a levy of execution or similar action by a creditor.
Maintaining a good credit standing is crucial for Cicis franchisees. Failure to make timely payments for products or services can negatively impact the goodwill associated with the Cicis brand and system. Therefore, franchisees must promptly pay all amounts owed to Cicis, its affiliates, and other suppliers, except for payments that are genuinely disputed.