Who is responsible for the Studio's payroll taxes at a Degree Wellness location?
Degree_Wellness Franchise · 2025 FDDAnswer from 2025 FDD Document
- (h) Performing all bookkeeping and accounting for the Studio Management Business and the Studio operations, including maintaining records, preparing any required financial reports, billing and collection of expenses, preparing and filing all federal, state, and local sales, payroll,
and business tax returns of the Studio Management Business and Studio/Licensed Provider, except such fees which shall remain the responsibility of Licensed Provider pursuant to Section 3.1(e);
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 63–66)
What This Means (2025 FDD)
According to Degree Wellness's 2025 Franchise Disclosure Document, the Management Company is responsible for preparing and filing all federal, state, and local payroll tax returns for the Studio. However, the Licensed Provider is ultimately responsible for the payment of the fees associated with these taxes.
This means that while the Management Company handles the administrative tasks of preparing and filing the payroll tax returns, the financial obligation to pay those taxes falls on the Licensed Provider. This division of responsibilities is important for prospective franchisees to understand, as it clarifies who is responsible for what aspects of payroll tax compliance.
It is important for potential Degree Wellness franchisees to carefully review Section 3.1(e) of the agreement, as referenced in the quote, to fully understand the scope of the Licensed Provider's responsibilities regarding these fees. Understanding this distinction is crucial for budgeting and financial planning, as the Licensed Provider needs to ensure they allocate sufficient funds to cover these tax obligations.