Certain kinds of agreement, popularly known as ‘franchises’, typically require the payment of an initial fee for use of the franchisor’s business format, trademark or goodwill, followed by a series of payments which might represent consideration for goods and services supplied by the franchisor on an ongoing basis, or simply royalties for access to the franchisor’s trade systems during the term of the franchise. For a general discussion of what constitutes a franchise, see ¶708-700. The question will arise in each case as to whether the initial payment constitutes revenue or capital expenditure by the franchisee.

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