Published on 28 May 08
by NEW SOUTH WALES DIVISION, THE TAX INSTITUTE
More and more businesses are taking advantage of the mutual benefits that are available with franchise arrangements. The franchisor is provided with an avenue to grow its business whilst the franchisee has immediate access to the trade name, operating systems and reputation of the franchisor. This paper demystifies franchises and considers many of the common tax and structuring issues associated with them. Topics covered include:
- what is a franchise?
- overview of regulatory framework for franchises
- when is a franchise arrangement appropriate?
- structuring issues for franchisors and franchisees
- taxation treatment of:
- upfront franchise fees
- ongoing franchise fees
- other fees and costs (marketing, fit outs etc)
- Intellectual property and goodwill issues
- Tax issues on sale, termination and expiry.