Franshises

esmith

Hi,

I was looking for some advice and tips on Franchises and how the accounts differ from say sole trader or ltd company?

I am looking to take on a ltd company who will be selling the franchises but he also wants me to be do the accounts of the franchisors!

Any advice would be gratefully received.

Thanks

jackie515

Hi

There are a few threads relating to franchises and how they should be dealt with in the accounts. Basically as far as I can make out if you are a sole trade they are treated as capital gains, but if they are a ltd company they can be amortised over the period of the franchise (depending on the franchise agreement).

Hope this helps

Jackie

Nilesh Mandvia

conflicting interest

One point to remember is that there would be conflict of interest if you would to do the accounts for both franchisor and franchisees. If franchor's charges or if franchisee is trading out side the franchise and not pay the royalty or management fees, then you have got the problem.

Nilesh

esmith

Hi

Does anyone else have any advice on this??
I would be grateful for any thoughts/comments??

Thanks

Em

BIG WAL

Hi Em,

I have a bookkeeping client who has a franchise, the terms of which are that that fee is for for a 5 year period. The client's accountant is writing this off equally over that period.

I realise this doesn't cover every situation, but maybe it's worth checking the franchise terms.