Royalty Rate Structure in Case of Franchising
نویسندگان
چکیده
The present article contains an analysis of differences between licensing and franchising. It is demonstrated that models of royalty rate calculation developed for licensing should not be applied to franchising as benefits received by licensee and franchisee are different. It is proposed to include in the model of royalty calculation the risk reduction generated by franchisor’s effective technologies and managerial support that are given to franchisee. It is demonstrated that franchisee may wish to acquire the franchise even if franchisor takes the full amount of additional income or if this additional income is negative.
منابع مشابه
A Risk-income Method of Royalty Rate Calculation in Case of Franchising
The present article contains a description of a new method of royalty calculation based on analysis of risk decrease generated by franchisor’s intellectual assets transmitted to franchisees.
متن کاملIntellectual Property Securitization and Growth Capital in Retail Franchising
A retail franchisor needs growth capital so that the brand continues to grow and franchisor–franchisee relations remain strong. However, access to corporate liquidity to fund such franchise growth options is not unlimited. A method of raising finance particularly suited to retail franchisors is intellectual property (IP) securitization that allows companies to account for intangible assets such...
متن کاملFranchsing: Limited opportunism and cooperation
“Traditional” principal agent theory interprets franchising as a solution to the agency problems associated with incentives and observability. Franchising has been viewed as an institution that aligns the right to make decisions with the residual claims deriving from these decisions. One problem associated with this explanation, is that in institutions like franchise systems or firms, the relev...
متن کاملA royalty negotiation model for BOT (build-operate-transfer) projects: The operational revenue-based model
Whilst few studies have explored royalty negotiations for build, operate and transfer (BOT) projects, some works have proposed numerous royalty formulas to evaluate royalty amounts or franchise fees for a BOT project. Despite this, the royalty negotiation process is one of the many critical negotiation items of a concession contract. This study not only developed a royalty negotiation model for...
متن کاملThe Impact of Royalty Contract Revision in a Multistage Strategic R&D Alliance
This paper investigates the impact of royalty revision on incentives and profits in a twostage (R&D stage and marketing stage) alliance with a marketer and an innovator. The marketer offers royalty contracts to the innovator. We find the potential for royalty revision leads to more severe distortions in the optimal initial royalty contracts offered by the marketer. We show if the innovator play...
متن کامل