Can a Kitchen Solvers franchisee withhold payment of amounts owed to the franchisor?
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)
Based on the 2025 Kitchen Solvers Franchise Disclosure Document, if any governmental authority requires a Kitchen Solvers franchisee to withhold payments to the franchisor for taxes or other reasons, the franchisee is obligated to pay additional amounts to Kitchen Solvers. This ensures that after accounting for the withheld taxes (including any taxes imposed on the additional amounts), Kitchen Solvers receives the same amount it would have received had the withholding not been required.
This provision means that a Kitchen Solvers franchisee cannot simply deduct the amount of any required withholding from their payments to the franchisor. Instead, the franchisee must 'gross up' the payment to cover both the withholding and the amount Kitchen Solvers is originally due. This protects the franchisor's revenue stream and ensures they receive the full financial benefit of the franchise agreement, regardless of any legal or regulatory requirements imposed on the franchisee.
For a prospective Kitchen Solvers franchisee, this highlights the importance of understanding all potential tax and legal obligations that could affect payments to the franchisor. It also emphasizes the need to factor in these additional costs when budgeting and forecasting the financial performance of the franchise. Failure to comply with this provision could result in a breach of the franchise agreement and potential legal or financial repercussions.