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Frachise

sntowellsntowell New MemberRegistered Posts: 13
:001_unsure: I have a client who has made an investment, I guess it is a kind of franchise. The investment is to buy the rights to sell the products of a company (including selling the franchises, tutoring and website selling).

Please could anyone give me some advice on how to deal with this in the accounts, there is no contract for this investment but the rights to sell the companies products including the franchises is unlimited.

Comments

  • sntowellsntowell New Member Registered Posts: 13
    Franchise Purchase Accounting Policies

    Hi,

    Does anyone know where may I can find out how to account for this correctly?

    :confused1:
  • Richardriddell86Richardriddell86 Just Joined Registered Posts: 1
    Hi....

    I want to know franchises is good or bad.

    Thanks
    richard
  • jamesm96jamesm96 Experienced Mentor Registered Posts: 523
    sntowell wrote: »
    Hi,

    Does anyone know where may I can find out how to account for this correctly?

    :confused1:

    Well, it sounds like it's basically an intangible asset so DR Intangibles in the Balance Sheet CR Bank, and then amortise it over the life of the licence. That said, what exactly was the fee for? And Is your client entitled to sell these product only for a finite period?
  • JodieRJodieR Experienced Mentor Registered Posts: 1,002
    Mike I think you might be about 3.5 years late with your reply!

    Richard - that's way to general a question to ask - the main pro of operating as a franchise is that you shouldn't have to do much in the way of advertising as you'll have a recognised brand name to start with, but you've got to be so careful with what you're signing up for as the contracts can place much of the risk with the franchisee while at the same time limiting them as to the sales prices, suppliers used etc.
  • jamesm96jamesm96 Experienced Mentor Registered Posts: 523
    JodieR wrote: »
    Mike I think you might be about 3.5 years late with your reply!

    Lol. I didn't even notice that! I just saw it was top of the forum so gave an answer.
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