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BTLG Table of Contents > Sales and Use Tax Annotations > L > 330.0000 Leases Of Tangible Personal Property—In General > Annotation 330.3974

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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660

Annotation 330.3974

(d) "Substantial Change in Form"

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330.3974 Franchised Restaurant Location. A restaurant chain/franchiser arranges with a landowner to erect a restaurant building on his land, and leases the land and building from the landowner. The franchiser then purchases tax-paid from various vendors everything necessary to equip and furnish the building as a ready to operate restaurant. The location is then operated by the franchiser until a franchisee is found, or the franchiser immediately franchises it. The franchise agreement includes a sublease of the land and building and a lease of the equipment and furnishings. This activity does not result in a substantial change in form of the property leased and the lease is not subject to tax. 9/12/68.