Who is responsible for paying sales and other transfer taxes when Crisp & Green purchases the Purchased Assets?

According to Crisp & Green's 2024 Franchise Disclosure Document, the franchisee is responsible for paying sales and other transfer taxes when Crisp & Green exercises its option to purchase the franchisee's assets. Specifically, the franchisee must provide instruments transferring good and merchantable title to the purchased assets, free and clear of all liens, encumbrances, and liabilities, to Crisp & Green or its designee, with all sales and other transfer taxes paid by the franchisee.

This means that if Crisp & Green decides to buy the assets of a franchised restaurant, the franchisee will bear the cost of any sales or transfer taxes associated with that transaction. This could represent a significant expense for the franchisee, especially if the assets are valued highly or if the sales tax rate is high in the relevant jurisdiction.

Franchisees should factor this potential cost into their financial planning and consider it when negotiating the terms of their franchise agreement. It is important to understand the potential tax implications of selling the business back to Crisp & Green and to seek professional advice to minimize the tax burden. This is a fairly standard clause in franchise agreements, as the seller typically covers these taxes unless explicitly negotiated otherwise.