Is a Crave Cookies franchisee required to pay all taxes when due?
Crave_Cookies Franchise · 2025 FDDAnswer from 2025 FDD Document
If Crave Cookies Franchising exercises the purchase option, Crave Cookies Franchising may deduct from the purchase price: (a) all amounts due from Franchisee; (b) Franchisee's portion of the cost of any appraisal conducted hereunder; and (c) amounts paid or to be paid by Crave Cookies Franchising to cure defaults under Franchisee's lease and/or amounts owed by Franchisee to third parties. If any of the assets are subject to a lien, Crave Cookies Franchising may pay a portion of the purchase price directly to the lienholder to pay off such lien. Crave Cookies Franchising may withhold 25% of the purchase price for 90 days to ensure that all of Franchisee's taxes and other liabilities are paid.
Source: Item 22 — CONTRACTS (FDD page 47)
What This Means (2025 FDD)
The 2025 Crave Cookies Franchise Disclosure Document addresses the payment of taxes in the context of Crave Cookies exercising its purchase option if a franchisee's business closes. Specifically, Crave Cookies may withhold 25% of the purchase price for 90 days to ensure that all of the franchisee's taxes and other liabilities are paid.
This clause protects Crave Cookies from potential liabilities arising from the franchisee's unpaid taxes. It also implies that the franchisee is ultimately responsible for ensuring all taxes are paid.
While the FDD excerpt does not explicitly state that the franchisee is responsible for paying all taxes when due, it does state that Crave Cookies may withhold a portion of the purchase price from the franchisee to ensure that all taxes and other liabilities are paid. A prospective franchisee should seek clarification from Crave Cookies regarding their obligations for tax payments and the potential consequences of failing to meet those obligations.