Under what circumstances must a Pump It Up franchisee reimburse the franchisor for taxes?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
- C. Taxes. We will have no liability for any sales, use, service, occupation, excise, gross receipts, income, property, or other taxes, whether levied upon you or the Franchised Business, due to the business you conduct (except for our income taxes). You are responsible for paying these taxes and must reimburse us for any taxes that we must pay to any state taxing authority on account of either your operation or payments that you make to us.
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to Pump It Up's 2025 Franchise Disclosure Document, the franchisee is responsible for all taxes related to their business operations. This includes sales, use, service, occupation, excise, gross receipts, income, property, or other taxes levied on the franchisee or the franchised business. The only exception is the franchisor's income taxes.
Specifically, a Pump It Up franchisee must reimburse the franchisor for any taxes that the franchisor is required to pay to a state taxing authority. This reimbursement is required if the taxes are due to either the franchisee's operation of the business or payments the franchisee makes to the franchisor.
This condition means that franchisees need to be diligent in understanding and paying all applicable taxes. Failure to do so could result in the franchisor paying those taxes on the franchisee's behalf and then requiring reimbursement from the franchisee. This could create an unexpected financial burden for the franchisee if not properly managed.