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Q: Can you tell me if a franchise fee can be counted as a business expense for tax purposes? If not, what should it be recorded on the tax return as?

Jan 31 2008

Answered by: Julie Waites     Ask a question

This is an accounting issue and whilst not being my area of expertise, I’ll give a “franchise” view. It depends what the franchise fee paid for. If it is a license fee, for intellectual property for instance, then it is not tax deductible as a business expense.

However, if it is part of a package fee that contributes towards the franchisors costs - recruitment, training and initial support - then it can be viewed as a business asset. This means it can be written down in line with individual costs of the package fee breakdown that should be provided by the franchisor. The British Franchise Association may also be able to provide you or your accountant with information on this.

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