One of the pieces of legislation currently pending before Congress that has the potential to significantly affect franchisors is the Business Activity Tax Simplification Act, or BATSA. BATSA would clarify federal tax law by resolving the question of economic “nexus” that is required for a state to succesfully impose an income tax on out-of-state companies.
Tag: KFC
KFC National Council and Advertising Cooperative, Inc. v. KFC Corporation: A Cautionary Tale
The Delaware Chancery Court recently issued a decision severely limiting KFC Corp.’s right to control brand marketing in a case that offers several important lessons about managing franchisee relations. The case involved a suit brought against the international fried chicken franchisor by a special purpose entity formed to develop and manage the chain’s domestic advertising. The suit centered on the scope of the NCAC’s authority to control brand advertising.
Iowa Supreme Court Orders Out-Of-State Franchisor To Pay Tax On Royalty Income
Last week, the Iowa Supreme Court issued a ruling that will require out-of-state franchisors to pay tax on income earned through royalties earned from Iowa-based franchisees. The decision has implications for any business that derives income from intangible assets (through licensing or otherwise) located in another state.
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