Is Mrcool liable for any state or local taxes or fees?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company has elected to be taxed as a Partnership under the Internal Revenue Code and applicable state statutes. As a partnership, the income of the Company flows through to the members to be taxed at the individual level rather than the corporate level. Accordingly, the Company will have no federal or state tax liability. The Company is liable for state and local license fees based on profitability or revenues.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, Mrcool has elected to be taxed as a Partnership under the Internal Revenue Code and applicable state statutes. As such, the income of Mrcool flows through to its members to be taxed at the individual level, rather than at the corporate level. Therefore, Mrcool will have no federal or state tax liability. However, Mrcool is liable for state and local license fees based on profitability or revenues.
For a prospective franchisee, this means that while Mrcool itself won't be paying federal or state income taxes, it is still responsible for any applicable state and local license fees. These fees are determined based on Mrcool's profitability or revenues, so the amount may vary.
It is important for a prospective franchisee to understand that this tax structure does not directly impact their own tax obligations as a franchisee. Franchisees will be responsible for their own federal, state, and local taxes based on their individual business structure and income.