After registering the agreement with Rospatent

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Sometimes, for an owner, the sale of services, namely the opportunity to use his brand, is the main source of income. In this case, lump sum payments are reported as part of the sales revenue. If his profit is based on other activities, such payments are considered operating income. The partner company's accounting records the lump sum payment in future expenses: the payment amount is divided into equal parts, and they are distributed among the usual types of activities for the period specified in the franchise agreement.


the franchisee receives a set of exclusive rights, which include a trademark/commercial line database name. As a result, this company becomes the copyright holder and must pay VAT, including from the lump sum payment. However, it has the right to receive a tax deduction on account of exclusive rights that are not subject to VAT. We are talking about inventions for which there are ready and registered patents, software and databases, industrial designs and utility models, know-how, industrial secrets, materials constituting a commercial secret.


Possibility of refund of the lump sum payment It happens that franchisors sell unfinished business projects. After a short period of time, the partner company understands that the brand will not bring profit, and the franchise lump sum fee was paid in vain. It will be possible to return the funds only in some situations. This opportunity arises if the commercial concession agreement was not concluded in writing, and the money has already been transferred to the brand owner.