Regarding taxes, what is the Floyds 99 franchisee's obligation to reimburse the franchisor?
Floyds_99 Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchisee shall indemnify, defend and hold harmless the Franchisor, its subsidiaries, parents and affiliates, and their respective shareholders, equity owners, partners, directors, officers, managers, members, employees, agents, representatives, successors and assigns (the "Indemnified Parties"), against, and to reimburse them for all claims, obligations, fines, suits, proceedings, demands, actions of any kind and nature, and damages described in this Section 21.3, any and all obligations described in Section 21.2 and any and all claims and liabilities directly or indirectly arising out of or is based upon or related to this Agreement, the operation of the FLOYD'S 99 Shop or arising out of all acts and omissions of the Franchisee and its employees related to labor or employment practices, failure to comply with any applicable laws or regulations, or the use of the Marks and Licensed Methods in any manner not in accordance with this Agreement.
For purposes of this indemnification, claims shall mean and include all obligations, actual and consequential damages and costs reasonably incurred in the defense of any claim against the Indemnified Parties (including any claims Franchisee brings against the Indemnified Parties), including, without limitation, reasonable accountants', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other litigation expenses and travel and living expenses.
The Franchisor shall have the right to defend any such claim against it.
Source: Item 22 — CONTRACTS (FDD pages 57–58)
What This Means (2025 FDD)
According to Floyds 99's 2025 Franchise Disclosure Document, the franchisee is obligated to indemnify, defend, and hold harmless the franchisor from various claims, including reimbursement for certain taxes. Specifically, the franchisee must reimburse Floyds 99 for any taxes levied upon the franchisor in connection with the sales made or business conducted by the franchisee. This excludes taxes the franchisor is legally required to collect from the franchisee related to purchases from the franchisor. This obligation is part of a broader indemnification agreement where the franchisee protects the franchisor from claims, suits, proceedings, and damages arising from the franchise agreement or the operation of the Floyds 99 shop.
This indemnification extends to all obligations described in section 21.2 of the agreement, which covers the franchisee's responsibility for their own obligations to third parties, including government agencies and tax authorities. The franchisee is also responsible for claims and liabilities arising from their acts, omissions, labor or employment practices, failure to comply with laws, or the use of the Marks and Licensed Methods not in accordance with the agreement.
The term 'claims' includes all obligations, actual and consequential damages, and costs reasonably incurred in defending against any claim, including accountant, attorney, and expert witness fees, investigation costs, court costs, litigation expenses, and travel and living expenses. Floyds 99 retains the right to defend any claim made against it. This means a franchisee could face significant financial burdens beyond their own tax liabilities if their business operations trigger tax obligations for the franchisor or lead to other legal claims.