Fasa Newsletter
 
 
FASA ANSWERS YOUR QUESTIONS AROUND THE CPA

QUESTION:  A franchisor has asked how one would justify the renewal franchise fee (which is usually around 50% of the upfront fee) in respect of the Consumer Protection Act.

ANSWER: Ian Jacobsberg, Director at Eversheds and a FASA executive member replies. “The issue with any fee in terms of the CPA is that it must be fair and reasonable in relation to what is being charged for it.  The starting point therefore is the upfront fee – what is it paid for and is it fair and reasonable in relation to that.  Most upfront fees are paid for the right to use the franchisor’s goodwill and Intellectual Property and for the services that the franchisor renders at the beginning of the relationship, i.e., administration, site location, training etc.  The renewal fee can be justified on the basis that a certain amount of administration is required in relation to the renewal and also that the payment for the use of goodwill and IP covers the value therof for the initial period only, so it is then justified to pay an additional amount for the additional period.  Whether 50% is a high or low figure is a question of fact, based on what services are rendered at the time of renewal, and whether the upfront fee did indeed cover the right to use goodwill and IP which may have been covered by ongoing charges as well.

 
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CLEM SUNTER PUSHES FOR ENTREPRENEURIAL GROWTH
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CONSUMER CREDIT RATING UP AND RETAIL CONFIDENCE HOLDS ITS OWN
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TAX ADMINISTRATION BILL (TAB) TIGHTENS UP TAX PROVISIONS
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FASA ANSWERS YOUR QUESTIONS AROUND THE CPA
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THINKING OF BUYING A FRANCHISE? FASA OFFERS TRAINING COURSES
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FASA LIFESTYLE ANNOUNCES ITS PARTNERSHIP WITH UR LOCATA AND INDEPENDENT NEWSPAPERS
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Fasa Events
FASA ONE DAY TRAINING COURSE FOR POTENTIAL FRANCHISEES

Date: 20th October 2011
Venue : FASA Office, Bruma (Venue subject to change pending delegate bookings)

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