Franchising: what is it, probably, did not know the Spanish queen

Today the business press periodically flashes the concept of "franchising." What it is? This term comes from the English word "franchise", which means "privilege" or "license". Historians believe that this scheme of trade relations was invented in the fifteenth century by the queen of Spain, who gave Columbus the right to trade in the open lands (1492). The classical form of franchising appeared somewhat later, in the same America.

The first contract on franchising

So, franchising. What was it like in the 19th century when it was just beginning? At that time, the production of sewing machines was actively developing, and the producers competed with each other, without any tangible benefits. Then the founder of the company "Singer" - Isaac Singer - organized the "Union of sewing machines", within which production firms were allowed to produce products using technology and under the brand "Singer". This gave the company a significant improvement in market positions.

Nowadays you can start your own business using franchising. What is this process? Acquiring a franchise, an entrepreneur receives an tried and tested scheme, for example, trade, promotional materials and consulting support. For this, he pays the developer of a business idea a monthly commission. Those. In its essence franchising is a trade in business technologies at retail.

Revenues and Basis of Taxation

How else can you interpret the concept of "franchising"? What is it in terms of taxation? Experts believe that for a person issuing a franchise (franchisor), income from a contract of this kind refers to the profits from the usual type of activity (Article 249 of the Tax Code of the Russian Federation). In addition to the so-called "lump-sum payment" (for the purchase of a franchise) and royalty (periodic deductions), the franchisor can make a profit when selling his franchise (franchise buyer) semi-finished products with a trade mark-up, and also provide training services for personnel, if provided for in the contract.

The situation in Russia

Franchising in Russia at the moment is not very developed, since there are not many own products that can be offered for this operation. For example, among the proposed franchises, you can find suggestions for the trade in concrete products under a certain brand, organizing soap bubble shows, trading tools for repair and construction, providing fitness services or in the area of mobile sinks, implementing educational programs. The volume of required investment ranges from $ 5,000 to a hundred and more than thousands of units of the US currency. The main drawbacks of this methodology are that not always franchisees pay remuneration in time, and can also provide services or produce products that do not correspond to quality, which entails an increase in reputational risks for the franchisor.

Franchising in Moscow is represented mainly by foreign companies from the food industry. For example, in 1993 the first "Baskin Robbins" franchise was sold in the capital, and today there are dozens of companies under this brand. Experts believe that such schemes have a rather big future, therefore some large Russian players (1C, Perekrestok, etc.) offer potential partners such cooperation.