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Financial Analytics: Science and Experience
 

Financial relationships between the franchisor and the franchisee

Vol. 9, Iss. 21, JUNE 2016

PDF  Article PDF Version

Received: 29 April 2016

Received in revised form: 4 May 2016

Accepted: 11 May 2016

Available online: 15 June 2016

Subject Heading: MONITORING OF ECONOMIC PROCESSES

JEL Classification: F40, G30

Pages: 29-41

Patrusheva A.V. Saint Petersburg Institute for Education in Humanities, St. Petersburg, Russian Federation
anna1980.p@yandex.ru

Importance As franchising practices actively progress in Russia, it is reasonable to analyze financial relationships between the franchisee and franchisor. The relationships imply various payment and settlement formats. To systematize information on franchising payments, there should be classification in line with the specifics of the parties' financial relationships.
Objectives The research reveals the economic substance of financial relationships between the franchisee and the franchisor.
Methods Applying the synthesis method, I found a group of payments, which the franchisee made to the franchisor as part of their contractual relations. I resorted to an analysis to study the financial relationships arising from sale and franchise back, and advantages of franchise payments, their effect on business value.
Results The research reviews the nature of financial relationships as part of the franchising contract, common and specific sources of the franchisor's income, their classification approaches, and models of one-off and regular payments. The article sets out the classification of financial sources for the franchisor and identifies the specific payments for the franchisor.
Conclusions and Relevance I conclude on the reasonableness of the existing approaches to classifying payments to the franchisee makes to the franchisor; grouping of some payments into separate types, and the effect of franchising payments on the franchisee and franchisor's business value. The article provides the rationale for dividing those payments into specific and general ones.

Keywords: franchisor, franchisee, financial relationships, payment, contract

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