Publishing House SB RAS:

Publishing House SB RAS:

Address of the Publishing House SB RAS:
Morskoy pr. 2, 630090 Novosibirsk, Russia



Advanced Search

Scientific journal Vestnik NSUEM

2016 year, number 4

BUSINESS MANAGEMENT COST ESTIMATES BASED FRANCHISEE FRANCHISED AWARD

A.V. Patrusheva
Ltd. ≪System≫, Str. Karl Liebknecht, 35, Omsk, 644099
Keywords: , , , , , franchising, business valuation, risk reduction, scenario method, franchise premium

Abstract

The goal of the present paper is to evaluate the increase of value of franchisees business obtained thanks to its participation in the franchise network. It is demonstrated that this increase of value is based on the lower level of risks of franchisee in comparison with an independent businessman because franchising as an entrepreneurial tool allows to reduce commercial, marketing, financial and legal risks. The notion of franchise premium was introduced to denote this increase of value. A method of evaluation of this franshise premium is proposed. This method is based on analysis of discounted cash flows obtained by franchisee and an independent within three possible scenarios (pessimistic, most probable and optimistic). Main advantages and disadvantages of the proposed method are described.