To whom does a Punch King Fitness franchisee pay Sales/Use Taxes?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
| Name of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| violation and/or non compliance. | |||
| Cost of Enforcement | Cost including attorney fees | Upon demand | If we prevail, you must reimburse us for all costs to enforce obligations under the Franchise Agreement. |
| Indemnification | Cost including attorney fees | Upon demand | You must defend suits at your cost and hold us harmless against suits involving damages resulting from your operation of the Franchised Business. |
| Sales/Use Taxes6 | The amount of federal, state, and local taxes levied on the Royalty Fees and National Advertising Contributions paid to Franchisor and other monies paid to Franchisor | Payable with your royalty fee or National Advertising Contribution payments | You must pay any state or local sales or use tax that may be assessed on fees paid to us. |
1 "Gross Revenues" means any and all money and other consideration you receive in connection with the ownership or operation of your Franchised Business and from the sale of any authorized products and services or from the sale of any goods or services under the Marks. Gross Revenues do not include sales or excise taxes that are separately stated and that you are required to collect from customers and pay to a governmental taxing authority.
Source: Item 6 — OTHER FEES (FDD pages 10–16)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, a franchisee may be required to pay sales or use taxes to both the franchisor and a governmental taxing authority. Specifically, the franchisee is responsible for paying any state or local sales or use tax that may be assessed on fees paid to Punch King Fitness. This includes taxes levied on Royalty Fees and National Advertising Contributions.
Additionally, the franchisee is responsible for collecting sales or excise taxes from customers and remitting those taxes to the appropriate governmental taxing authority. Gross Revenues, as defined in the FDD, do not include sales or excise taxes that are separately stated and that the franchisee is required to collect from customers and pay to a governmental taxing authority.
In summary, a Punch King Fitness franchisee must understand their obligations regarding sales and use taxes, ensuring they collect and remit taxes to the correct entities as required by law. Failure to comply with these tax obligations could result in penalties and legal issues.