Under what circumstances is Hyper Kidz responsible for collecting taxes from the franchisee?

According to Hyper Kidz's 2024 Franchise Disclosure Document, the franchisee is generally responsible for all taxes related to their Hyper Kidz business. However, there is one specific circumstance where Hyper Kidz will collect taxes from the franchisee.

Specifically, if the state in which the Hyper Kidz Business is located imposes a sales or other tax on the royalty fees paid by the franchisee to Hyper Kidz, then Hyper Kidz has the right to collect this tax from the franchisee. The royalty fee is 6% of Gross Sales.

This means that franchisees need to be aware of the tax laws in their specific state regarding royalty fees. If such a tax exists, they should expect Hyper Kidz to collect it in addition to the standard royalty fee. This could impact the franchisee's financial planning and budgeting, as it adds an additional expense to the ongoing costs of running the franchise.