Franchising royalties income statement

[MasudIbne756]

As regards accounting management, the entrance fee does not have a preferential tax treatment because it appears as a provision of services that the parent company provides to the affiliate; therefore, there will be VAT at 22%.

In addition to the entry fee, the franchisee must also pay the franchisor royalties, let's see together what this is about.


Franchising royalties income statement
Royalties are a fundamental item in the parent company's office 365 data income statement because, unlike the entry fee which is paid only once a year at the time of purchase, royalties remain for the entire time the affiliate is within the network.

So the franchising royalty is your real recurring income from affiliates!
Consequently, in the income statement it will be on the royalties that you will have to calculate the actual costs, while you will calculate on the entry fee only the one-off activities.
So, if you are thinking of hiring people, hire them by doing the income statement not so much on the entry fee but on the income that comes from the royalties.