As part of a franchise, the franchisor (the person or organisation selling the product or service) will provide the franchisee (the person buying into the business) with access to a tried and trusted (and usually branded) system for running a business. This will usually also include training, centralised marketing and additional services.
This usually includes an initial fee and ongoing fees as part of the agreement.
Initial fee
The initial fee usually includes a payment to use the franchisor’s brand name and includes start-up costs to get the business setup ready to trade. This can include training costs, stock and equipment. Where the items are later sold on, these are income for the business, however the initial item will have cost the business money.
The franchise fee will usually include a mix of tangible (physical) and intangible (not physical) assets. For example, start up books are classed as a tangible asset as you physically have this. However start-up training cannot be ‘touched’ and instead is classed as an intangible asset. Where it can be demonstrated that part of the fee includes tangible items, these can be claimed as part of the fee, however other items (such as a fee towards the right to use a name) in the franchise fee cannot.
You may receive an itemised list of what you receive as a franchisee and this list should have the value of products listed against these – this can be claimed as a startup cost.
Annotated Franchise List
We’re pleased to provide an annotated franchise list with details of items which have been provided as a standard Slimming World franchise.
You’ll find the list attached to the bottom of this article under the ‘attachments’ section.
Although we aim to keep this list accurate, franchise contents may change, and you should personally check your listing against current Slimming World prices to ensure you have the correct figures for your tax return.
Where the amount paid is less than the tangible value, you would claim the lower amount
Ongoing fees
Franchise fees which are paid during your consultancy (sometimes known as Net Fees A) are an expense. If you’re using our free spreadsheet, you can read guidance on this here.
Subsequent Franchise Fees
Where a future fee is paid, this can be claimed as an expense as a business license to operate.