Under what circumstances will an Even Hotels client be required to reimburse SCH for taxes paid?
Even_Hotels Franchise · 2025 FDDAnswer from 2025 FDD Document
Any and all taxes, except income taxes of SCH, imposed or assessed by reason of this contract or its performance, including but not limited to sales or use taxes, shall be paid by Client. Client and SCH specifically agree that SCH is not an employee of Client. In the event foreign, federal, state or local taxes are assessed on the Services and SCH has paid for such taxes, Client shall promptly reimburse SCH for all such taxes except for those taxes based on the income of SCH, SCH employees, or personnel provided by SCH pursuant to this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 99–438)
What This Means (2025 FDD)
According to Even Hotels' 2025 Franchise Disclosure Document, a client is required to reimburse SCH (presumably an affiliate providing revenue management services) for taxes paid under specific circumstances. The client is responsible for paying any taxes related to the contract or its performance, excluding SCH's income taxes.
Specifically, if foreign, federal, state, or local taxes are assessed on the services provided, and SCH has already paid these taxes, the client must promptly reimburse SCH for the amount paid. However, this reimbursement requirement excludes taxes based on the income of SCH, its employees, or personnel provided by SCH under the agreement. This means Even Hotels franchisees will need to budget for potential tax reimbursements to SCH, in addition to the standard fees for services.
This arrangement is fairly standard in franchising and business services agreements. It ensures that the service provider (SCH in this case) does not bear the tax burden associated with providing services to the client (the Even Hotels franchisee). The franchisee should be aware of potential tax liabilities and ensure they understand which taxes they are responsible for reimbursing.