Does Crave Cookies Franchising require franchisees 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 does not explicitly state that franchisees are required to pay all taxes when due. However, it does state that if Crave Cookies exercises its purchase option upon termination of the franchise agreement, it 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 implies that franchisees are indeed responsible for paying their taxes. The withholding provision protects Crave Cookies from potential liabilities arising from unpaid franchisee taxes. It also suggests that Crave Cookies has the right to ensure these obligations are met before disbursing the full purchase price.
Prospective Crave Cookies franchisees should seek clarification from the franchisor regarding their obligations for tax payments, including the timing and methods of payment, to fully understand their responsibilities and avoid potential issues.