Are Crave's income taxes levied at the company level or the member level?
Crave Franchise · 2025 FDDAnswer from 2025 FDD Document
3. Income taxes
Income taxes on Company income are levied on the Member at the individual level. Accordingly, all profits and losses of the Company are recognized on the Member's respective tax return. The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the Company to report information regarding its exposure to various tax positions taken by the Company. Management has determined whether any tax positions have met the recognition threshold and has measured the Company's exposure to those tax positions, noting none at the Company level.
Source: Item 23 — RECEIPTS (FDD pages 63–253)
What This Means (2025 FDD)
According to Crave's 2025 Franchise Disclosure Document, income taxes on the company's income are levied on the member at the individual level. This means that Crave Franchising, LLC itself does not pay income taxes directly. Instead, the profits and losses of the company are recognized on the individual member's tax return.
For a prospective franchisee, this information is relevant because it clarifies the tax structure of the franchise company. Crave operates as a limited liability company (LLC) in Wyoming, which typically allows profits and losses to pass through directly to the owner's personal income without being taxed at the corporate level. This structure can have implications for how the franchisee interacts with Crave regarding financial reporting and understanding the overall profitability of the franchise system.
The FDD also notes that management has determined whether any tax positions have met the recognition threshold and has measured the company's exposure to those tax positions, noting none at the company level. This suggests that Crave's management is actively monitoring and addressing tax-related issues, but that any tax implications would primarily affect the individual member rather than the company itself.
Prospective franchisees should consult with a financial advisor or tax professional to understand the full implications of this tax structure and how it might affect their investment in a Crave franchise.