Who is responsible for paying sales and transfer taxes on the Assets transferred in a Cinnaholic franchise sale?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall promptly pay when due all taxes levied or assessed by reason of its operation and performance under this Agreement including, but not limited to, if applicable, state employment tax, state sales tax (including any sales or use tax on equipment purchased or leased) and all other taxes and expenses of operating the Bakery. In no event shall Franchisee permit a tax sale or seizure by levy or execution or similar writ or warrant to occur against the Bakery, the Franchised Site or any tangible personal property used in connection with the operation of the Bakery.
Source: Item 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, the franchisee is responsible for paying sales taxes. Specifically, the franchisee must promptly pay all taxes levied or assessed due to their operation and performance under the Franchise Agreement. This includes state employment tax, state sales tax (including any sales or use tax on equipment purchased or leased), and all other taxes and expenses related to operating the bakery.
This means that a Cinnaholic franchisee is responsible for managing and paying all applicable taxes associated with running the bakery. This obligation extends to sales taxes on products sold, taxes on equipment, and any other relevant taxes incurred during the bakery's operation. Franchisees must ensure timely payment of these taxes to avoid any tax sales, seizures, or legal actions against the bakery or its assets.
This allocation of tax responsibility is standard in franchising. It is crucial for prospective Cinnaholic franchisees to understand and budget for these tax obligations as part of their ongoing operational costs. They should consult with a tax professional to ensure compliance with all applicable tax laws and regulations.