The Investment Value of Brand Franchise

Jack Treynor

Financial Analysts Journal, 1999, vol. 55, issue 2, 27-34

Abstract: Brand loyalty manifests itself in consumers' willingness to pay a higher price for the brand they prefer. Some manufacturers choose to limit their output, sell only to customers loyal to their brand (their franchise), and charge the higher price. Others choose to charge a lower price rather than limit their output. Because franchises can contribute as much, or more, to future cash flows as their plants contribute, companies in the first group support their franchises by large investments in advertising, introducing new versions of their products, and so on. Accountants, however, are reluctant to capitalize the expenditures that support franchises, which causes gaps between market value and book value. If the fixed marketing costs can be identified, however, analysts can estimate the investment value of the franchise and the manufacturer's efficiency in defending it.

Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.2469/faj.v55.n2.2258 (text/html)
Access to full text is restricted to subscribers.

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:taf:ufajxx:v:55:y:1999:i:2:p:27-34

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/ufaj20

DOI: 10.2469/faj.v55.n2.2258

Access Statistics for this article

Financial Analysts Journal is currently edited by Maryann Dupes

More articles in Financial Analysts Journal from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().