Factors of Brand Value of Franchising Companies

Nowadays franchising considers as a widely-spread form of business relationships. Operating in accordance with the commercial concession agreement (it is also called franchise contract) implies a brand sale. As a consequence, it is crucially important to know how much the brand costs and which factors affect its value. The study consists of three chapters. The first chapter is dedicated to the theory that is related to the franchising system: its outstanding characteristics and features. The second chapter is dedicated to the theory of the evaluation of the brand value and the third one is a practical part of the study. The main aim of research paper is to identify which factors affect the brand value of franchising companies and in what degree. The most common method that is used to identify factors which influence on value of the brand and degree of the influence is a regression analysis. In order to reach the main aim some tasks were solved. Firstly, the dataset was made (the list of 90 brands of franchising companies and factors that may affect their brand value). Secondly, after the data had been collected the descriptive analysis of the data was carried out. Thirdly, some regression models were made. They were compared using some formal tests. As a consequence, one of these regression models was chosen as the best model which describes initial data. In addition to this, the model with the binary variable characterizing the geographic origin of the brand (1-Russian, 0-foreign) was made in order to identify differences between factors that influence on Russian and foreign brand's value. Once regression analysis was carried out, factors which affect the brand value of the franchising companies and degree of the influence were identified: amount of royalty and investments, year of the foundation and sphere of the operation of the company. It is worth mentioning that all these factors affect the brand value positively.