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Financial Analytics: Science and Experience

The substance of franchise assets

Vol. 10, Iss. 5, MAY 2017

PDF  Article PDF Version

Received: 27 September 2016

Received in revised form: 7 March 2017

Accepted: 16 March 2017

Available online: 15 May 2017


JEL Classification: F40, G30

Pages: 493-505


Patrusheva A.V. OOO Sistema, Omsk, Russian Federation

Importance Forming the franchise network, partners merge their assets for joint operations. Tangible and intangible assets acquire new qualities. The substance of the assets transforms. Therefore, it becomes reasonable to identify the nature of franchise assets, examine their composition and analyze the specifics of their construction and operations.
Objectives The research reveals the economic nature of franchise assets, identifies their composition and qualities.
Methods The article provides the rationale for identifying the nature of franchise assets, examining their composition and analyzing the specifics of their construction and operations. I specified the notion of assets the franchisee and franchisor provide to develop the network. I also examined what made up the intellectual capital stakeholders invested to form and develop the network. I introduced the concept of the franchise network’s assets and described their formation mechanism and the effect on business value of the partners. The article illustrates that the franchisee’s assets, if operated out of the network, have different value in comparison with their involvement in the network.
Results The franchise network was found to have specific types of assets, which are different from those circulating in conventional hierarchical firms. The article highlights the difference of franchise assets from the nature of assets circulating in the conventional hierarchical firm. The research identifies the composition, structure and qualities of franchise assets.
Conclusions and Relevance Franchise assets are reasonable to qualify as a separate type that influences business value of partners.

Keywords: franchise, network, franchise assets, intellectual capital, business cost


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