Does the Kitchen Solvers franchise agreement specify who is responsible for paying taxes on the Initial Fee?
Kitchen_Solvers Franchise · 2025 FDDAnswer from 2025 FDD Document
In either case, you shall pay us (and to the appropriate governmental authority) such additional amounts as are necessary to provide us, after taking such taxes into account (including any additional taxes imposed on such additional amounts), with the same amount that we would have received or accrued had such withholding or other payment, whether by you or by us, not been required.
Source: Item 22 — Contracts (FDD page 49)
What This Means (2025 FDD)
According to Kitchen Solvers's 2025 Franchise Disclosure Document, the franchisee is responsible for covering taxes associated with payments to the franchisor. Specifically, the franchisee must pay any additional amounts necessary to ensure that Kitchen Solvers receives the full amount of the payment after accounting for taxes. This includes covering any additional taxes imposed on these additional amounts.
This provision means that if any taxes are required to be withheld from payments to Kitchen Solvers, the franchisee must increase their payment to cover those taxes. This ensures that Kitchen Solvers receives the same amount it would have received if no tax withholding was required. The franchisee bears the economic burden of these taxes, not Kitchen Solvers.
For a prospective Kitchen Solvers franchisee, this clause highlights the importance of budgeting for potential tax obligations related to franchise fees and other payments. It is advisable to consult with a tax professional to understand the specific tax implications and ensure compliance with all applicable tax laws. This requirement is not uncommon in franchising, as franchisors typically want to ensure they receive the full agreed-upon fee, net of any tax withholdings.