Is a Crave franchisee responsible for paying all taxes related to the operation of their business?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
ARTICLE 13 DEBTS AND TAXES
13.1 Taxes
You shall 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 the conduct of the Franchised Business under this Agreement. Without limiting the provisions of Article 15, you shall be solely liable for the payment of all Taxes and shall indemnify us for the full amount of all such Taxes and for any liability (including penalties, interest and expenses) arising from or concerning the payment of Taxes, whether such Taxes were correctly or legally asserted or not. You shall submit a copy of all tax filings sent to federal, state and local tax authorities to us within ten (10) business days after such filing has been made with the appropriate taxing authority.
The term "Taxes" means any present or future taxes, levies, imposts, duties or other charges of whatever nature, including any interest or penalties thereon, imposed by any government or political subdivision of such government on or relating to the operation of the Franchised Business, the payment of monies, taxes imposed on the Royalty Fees paid to us, or the exercise of rights granted pursuant to this Agreement, whether imposed upon you or us.
13.2 Payments to Us
Each payment to be made to us hereunder shall be made free and clear and without deduction for any Taxes.
13.3 Tax Disputes
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 shall 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 the Franchised Business or any improvements thereon.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, franchisees are indeed responsible for handling all tax obligations related to their business operations. Specifically, the franchisee must promptly pay all taxes, levies, and other charges imposed by any government entity concerning the operation of the franchised business. This includes taxes on payments, such as those on royalty fees paid to Crave, or the exercise of rights granted in the agreement, whether these taxes are imposed on the franchisee or Crave itself.
Furthermore, the franchisee is obligated to indemnify Crave for the full amount of all such taxes and any associated liabilities, including penalties, interest, and expenses, regardless of whether the taxes were correctly or legally asserted. To ensure transparency and compliance, the franchisee must also provide Crave with copies of all tax filings submitted to federal, state, and local tax authorities within ten business days after filing.
While franchisees are permitted to dispute tax liabilities, they must ensure that no tax sale or seizure occurs against the business premises due to unpaid taxes. Each payment made to Crave must be free and clear of any tax deductions. This comprehensive allocation of tax responsibilities to the franchisee is standard practice in franchising, ensuring that each business owner is accountable for their own financial and legal obligations.