Examples of franchise in the following topics:
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- A common industry that uses franchising is fast food.
- Instead, the franchisee records a franchise expense when she pays the franchise fee.
- If the contract requires that a lump sum be paid up front to secure the franchise rights for several years, the franchisee would record a franchise asset on its balance sheet.
- Therefore, the value of the franchise asset equals what it cost to acquire.
- For a franchise, the useful life is generally the length of the franchise contract.
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- Some examples of indefinite-life intangibles are goodwill, trademarks, and perpetual franchises.
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- The most common types of intangibles are patents, copyrights, franchises or licenses, trademarks or trade names, and goodwill.
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- Intangible assets generally arise from two sources: (1) exclusive privileges granted by governmental authority or by legal contract, such as patents, copyrights, franchises, trademarks and trade names; and (2) superior entrepreneurial capacity or management know-how and customer loyalty , which is called goodwill.