Does the Pearce Bespoke franchisee have to pay the franchisor's income tax obligation?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
Nothing in this Agreement may be construed to create a partnership, joint venture, agency, employment, or fiduciary relationship of any kind. None of Franchisee's employees will be considered to be Franchisor's employees. Neither Franchisee nor any of Franchisee's employees whose compensation is paid by Franchisee may in any way, directly or indirectly, expressly or by implication, be construed to be an employee of Franchisor for any purpose, most particularly with respect to any mandated or other insurance coverage, tax or contributions, or requirements pertaining to withholdings, levied, or fixed by any city, state, or federal governmental agency.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to Pearce Bespoke's 2025 Franchise Disclosure Document, the franchisee is responsible for their own income tax obligations. The agreement explicitly states that neither the franchisee nor their employees should be considered employees of Pearce Bespoke for any purpose, especially concerning tax obligations. This means the franchisee is responsible for all taxes and contributions related to their employees, as levied by any governmental agency. Pearce Bespoke will not be responsible for any insurance coverage, tax, or withholdings related to the franchisee's employees.
This arrangement reflects the typical franchise model where franchisees operate as independent contractors. The franchisee has sole discretion over the essential terms and conditions of employment for their staff, further solidifying their role as an independent entity. This independence extends to day-to-day control over the Pearce Bespoke franchise operations, emphasizing that the franchisee is responsible for all aspects of their business, including tax obligations.
For a prospective Pearce Bespoke franchisee, this means they must budget for and manage all employment-related taxes and contributions. They should consult with a tax professional to ensure compliance with all applicable city, state, and federal regulations. This also means that Pearce Bespoke franchisees cannot rely on the franchisor to handle any tax-related matters for their employees, as the responsibility lies solely with the franchisee.