Lump sum payment: what is it and how to calculate it

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Svetlana Gagina
Svetlana Gagina
Head of the Financial Directors Division of Neskuchnye Finansy

A lump sum payment is the first step for those who want to work under a well-known franchise. But what exactly do you have to pay for? What does the amount depend on? And why in some cases there may be no payment at all?

Svetlana Gagina, head of the financial bangladesh phone number lead directors division at Neskuchnye Finansy, explained what a lump sum payment means and what services and support it covers.

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Content

What is a lump sum payment?
What and when is the lump sum payment paid for?
Lump sum and royalties
What influences the size of the lump sum payment
What's the catch with a franchise without a lump sum fee?
Is it possible to return the lump sum payment?
Taxes on lump sum contribution
VAT
Income tax
Simplified Tax System
Lump sum payment in accounting


What is a lump sum payment?
This is a one-time fixed amount that an entrepreneur pays when purchasing a franchise. In return, he receives the right to use the brand and name of the company.

Example . Someone wants to open a business under the name of a well-known company: Dodo Pizza or Wildberries. The first thing he does is pay a certain amount to the franchise owner - a lump sum. Usually other payments follow, but this is the very first one.

It is interesting that in Russian legislation there are no concepts of "franchising" or "lump sum payment" - this is more of a Western story, where such terms are enshrined in laws. In our country, franchising is regulated as a commercial concession agreement (Chapter 54 of the Civil Code of the Russian Federation).

Based on the law, the payment for the right to use the brand will be the same remuneration that is paid under a commercial concession agreement. As a result, although the term is not in the law, the phenomenon itself and its legislative regulation exist.