Nexus goes to Washington; as this edition of Franchising World went to press, the International Franchise Association filed an amicus (friend of the court) brief in support of Supreme Court review in A&F Trademarks v. State of North Carolina as cited in this article.(FW FOCUS: LEGAL)

Franchising World, August, 2005 by Schaeffer, Bruce S.

Victoria's Secret wants to appear before the U.S. Supreme Court to strip off its tax liability. As reported by publisher CCH Inc., on June 2, 2005, Limited Brands, the owner of Abercrombie & Fitch and Victoria's Secret, filed a petition for certiorari in A&F Trademark.

The question presented: "Whether Quill Corp. v. North Dakota's Commerce Clause nexus test forbidding taxation in the absence of physical presence applies to all state taxes ... or ... whether the rule only applies to State sales and use taxes."

Two issues may affect tax costs to franchisors and licensors: whether or not the operation of a franchisee in a particular state constitutes tax "nexus" for the franchisor; and whether or not royalties paid by company-owned units can be deducted...

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