What are the consequences if a Craters & Freighters franchisee fails to pay required taxes?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
.7 Compliance with Operations Manuals and System Standards. Franchisee fails or refuses to comply with the Operations Manuals or, more specifically, any of the System Standards.
- 19.2.8 Taxes. Franchisee fails or refuses to pay any federal, state, or local income, sales, or other taxes due in connection with Franchisee's operation of the Franchised Business, including any taxes levied upon Franchisor, in connection with the sales made or business conducted by Franchisee (except any taxes Franchisor is required by law to collect from Franchisee with respect to purchases from Franchisor).
- 19.2.9 Licenses and Permits. Franchisee fails or refuses to obtain and/or maintain all applicable Licenses and Permits relating to the operation of the Franchised Business.
- 19.2.10 Consent Not Obtained.
Source: Item 22 — CONTRACTS (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, if a franchisee fails or refuses to pay any federal, state, or local income, sales, or other taxes due in connection with the operation of their franchised business, including taxes levied upon Craters & Freighters in connection with the sales made or business conducted by the franchisee, it constitutes a breach of the franchise agreement. This excludes any taxes Craters & Freighters is legally required to collect from the franchisee for purchases from Craters & Freighters.
Failure to pay taxes can lead to termination of the franchise agreement. Additionally, if Craters & Freighters incurs costs engaging legal counsel due to the franchisee's failure to comply with the agreement, including the failure to pay amounts owed, the franchisee will be responsible for reimbursing Craters & Freighters for these costs.
This provision highlights the importance of sound financial management and tax compliance for Craters & Freighters franchisees. Prospective franchisees should ensure they have a clear understanding of their tax obligations and the resources to meet them to avoid potential penalties and legal issues.