How are federal income taxes handled for Pump It Up, given its partnership structure?

According to the 2025 Pump It Up Franchise Disclosure Document, Pump It Up Holdings, LLC is treated as a partnership for federal income tax purposes. Because of this structure, Pump It Up itself does not pay federal income taxes. Instead, the company's earnings are allocated among its members, who are then individually responsible for paying taxes on their share of the earnings. This is a common practice for partnerships, where the tax liability passes through to the individual partners. Pump It Up does, however, pay income and other taxes to various states based on gross revenue.

This arrangement means that prospective Pump It Up franchisees who become members of the partnership will need to account for their share of the company's earnings when filing their individual tax returns. It's important for franchisees to understand how the company's income or loss is allocated among the members, as this will directly impact their personal tax obligations. Franchisees should consult with a tax professional to ensure they are properly accounting for their share of the company's earnings and complying with all applicable tax laws.

Pump It Up also follows the income tax standard for uncertain tax positions and recognized no liability for uncertain tax positions as of December 31, 2024 and 2023. This indicates that Pump It Up is diligent in its tax practices and is not aware of any significant tax liabilities. However, franchisees should still be aware of their own tax obligations and consult with a tax professional to ensure they are in compliance with all applicable tax laws.