Franchise (License)
Accounting glossary · Understand, connect, apply
A franchise or license is a contractual right to use specified intellectual property, branding, processes or other privileges under agreed conditions.
Example
A café pays for the right to operate under a brand name for a defined period and evaluates the payment’s accounting treatment.
Remember the difference
The contract may include several components. Initial rights, continuing service fees and equipment purchases need not receive the same treatment.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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