Franchising: what the Spanish queen probably did not know

Today in the business press, the concept of “franchising” periodically flashes. What it is? This term comes from the English word "franchise", which means "privilege" or "license". Historians believe that the Queen of Spain invented this scheme of trade relations in the fifteenth century , which gave Columbus the right to trade in the lands he discovered (1492). The classic form of franchising appeared a little later, in the same America.

franchising what is it

First Franchise Contract

So, franchising. What was it in the 19th century when it was just in its infancy? At that time, the production of sewing machines was actively developing, and manufacturers competed with each other without receiving tangible benefits. Then the founder of the company “Singer” - Isaac Singer - organized the “Association of Sewing Machines”, under which manufacturing companies received the right to produce products using technology and under the brand name “Singer”. This gave the company a significant improvement in market position.

Nowadays, you can start your own business using franchising. What is this process? By acquiring a franchise, an entrepreneur receives a tried and tested scheme, such as sales, promotional materials and consulting support. For this, he pays the developer of the business idea a monthly commission. Those. Franchising is essentially retailing business technology.

franchising in Moscow

Income and taxation basis

How else can you interpret the concept of "franchising"? What is this in terms of taxation? Experts believe that for a person issuing a franchise (franchisor), income from a contract of this kind refers to profit from ordinary activities (Article 249 of the Tax Code of the Russian Federation). In addition to the so-called “lump-sum payment” (for the acquisition of a franchise) and royalties (periodic deductions), the franchisor can make a profit by selling to the franchisee (buyer of the franchise) semi-finished products with a trade margin, as well as provide training services for personnel, if this is stipulated by the contract.

franchising in Russia

The situation in Russia

Franchising in Russia at the moment is not very developed, because there are few proprietary products that can be offered for this operation. For example, among the franchises offered, you can find offers for trading concrete products under a certain brand, organizing soap bubble shows, selling tools for repair and construction, providing fitness or mobile washing services, and implementing educational programs. The volume of required investments ranges from $ 5,000 to one hundred or more than thousands of units of American currency. The main disadvantages of this methodology are that franchisees do not always pay fees on time, and can also provide services or produce products that are not of appropriate quality, which entails an increase in reputation risks for the franchisor.

Franchising in Moscow is represented mainly by foreign food companies. For example, in 1993, the first Baskin Robbins franchise was sold in the capital, and today there are dozens of companies under this brand. Experts believe that such schemes have a rather big future, therefore, some large Russian players (1C, Perekrestok, etc.) offer such cooperation to potential partners.


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