I’m about to pay a significant initial franchise fee. Will I be able to deduct any of that cost from my earnings for my first year of trading?
It depends on exactly what the initial franchise fee represents. It may include elements for staff training, stationery, operating manuals, stock, which can be generally deducted from your trading income. However, a large part of the fee may represent know-how or goodwill attached to the franchise brand. This is a capital cost, which may be written off gradually against your profits if you trade as a company. The franchisor should provide you with an itemised breakdown of the initial fee, which we can help you analyse into deductible and non-deductible elements.