Does the Coffee News franchisee have to pay all taxes connected with the franchised business?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
Coffee News USA, Inc. is an S corporation under provisions of the United States Internal Revenue Code. As such, its income for federal income tax purposes is taxed at the shareholder level, and no income taxes are provided for the Company. Federal and state returns for 2024, 2023, and 2022 are subject to examination by the IRS, generally for three years after they were filed.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to Coffee News's 2025 Franchise Disclosure Document, the company operates as an S corporation, meaning its income is taxed at the shareholder level for federal income tax purposes. Therefore, Coffee News USA, Inc. does not provide for income taxes at the company level. However, this statement pertains to the Coffee News USA, Inc. and not to the franchisees of Coffee News.
As an independent contractor, the Coffee News franchisee is responsible for all applicable taxes associated with the operation of their franchised business. This is a common arrangement in franchising, where franchisees are typically treated as separate legal entities responsible for their own financial obligations, including taxes.
While the FDD excerpt does not explicitly state that franchisees are responsible for their own taxes, it establishes the franchisee as an independent contractor, which carries the implication that they are responsible for their own tax obligations. A prospective franchisee should consult with a financial advisor or tax professional to understand their specific tax obligations as a Coffee News franchisee.