Franchisor and franchisee: harmony or conflict of interests


The urgency of studying the problems of the conflict of interests between the opposing parties in a franchise relationship, i.e., the franchisor and franchisee, has been substantiated. It has been shown that the slow pace of development of franchising in Russia today does not allow using the advantages and reserves which this effective form of small business organization contains.  The problem of legal confusion in the law enforcement practice of franchising in Russia (franchising, according to Russian law, is called the commercial concession) has been analyzed.  Different forms of franchise, including: trade franchising, business franchising, production franchising, conversion franchising, district franchising and subfranchising have been listed and described. The problem of balancing the interests of the parties has also been considered. Results of comparison of the advantages and the disadvantages of franchising, separately for the franchisee and for the franchiser, have been systematized.  The contradictory nature of these results, and the need to find a compromise have also been noted.  Basic features of franchising as a way of starting a new business have been marked out. As the most common variant of payment for the purchase of a franchise has been named A scheme under which the franchisee pays a lump-sum (initial) fee first, and then regularly pays royalties (a percentage of the revenue).  The experience of the author of the article on training and consulting business start-ups within the program of the self-employment of the population organized by the Committee on work and employment of the population of the Government of St. Petersburg has been generalized. The content of the developed guidelines and manuals, among which an important place is occupied by the guide on franchising and text templates and financial part of the business plan for the franchise acquisition projects, has been characterized.  The methods that justify the cost of the franchise and the value of the royalties have been supported by numerical examples and given in the final part of the article. Methods of evaluating the intangible assets, also known in valuation practice as the royalty method and the method of excess profits, have been chosen as a basis.