Franchise Agreement: Payment Terms and Method of Calculating Franchisor’s Income and Expenditure

Anatoly Sergeevich Ishuk and Yuri Anatolievich Savinov
Additional contact information
Anatoly Sergeevich Ishuk: Russian Foreign Trade Academy, Moscow, Russia
Yuri Anatolievich Savinov: Russian Foreign Trade Academy, Moscow, Russia

Russian Foreign Economic Journal, 2023, issue 9, 38-46

Abstract: The diversity of fees is a peculiarity of financial flows in franchising. In addition to regular payments in the form of royalty, the franchisee shall also pay a lump sum upon conclusion of the agreement and make all the other negotiated payments. However, in spite of the diversity of franchise payments, there is no unified classification and method of their calculation in Russian literature. As a result, would-be franchisees often give up buying a franchise in order to avoid all the complexities of financial relations with the franchisor. However, franchisors often calculate payments in accordance with subjective realities and do not consider market conditions. The article focuses on financial flows in franchising and offers a method of calculating franchise fees. The article proves that the diversity of franchise fees emanates from economic essence of franchising and that objective market laws should serve as a necessary fundament for franchise fees’ calculation. The study analyzes the factors of generation and distribution of franchise financial flows, and its results can be applied to business practices of franchising enterprises.

Keywords: franchising; franchise contract; financial flows; franchise fees; royalty; lump sum; franchise; the method of calculation; franchising networks; franchising enterprises (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repec.vavt.ru/RePEc/alq/rufejo/rfej_2023_09_38-46.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:alq:rufejo:rfej_2023_09_38-46

DOI: 10.24412/2072-8042-2023-9-38-46

Access Statistics for this article

More articles in Russian Foreign Economic Journal from Russian Foreign Trade Academy Ministry of economic development of the Russian Federation Contact information at EDIRC.
Bibliographic data for series maintained by Irina Katolik ().