Abstract

RAMIREZ DENIS, Carlos Andrés; QUIRAMA ESTRADA, Uvenny; MONTES GOMEZ, Luis Fernando  and  SEPULVEDA-AGUIRRE, Jovany. Franchise valuation framework: a real options approach. Contad. Adm [online]. 2022, vol.67, n.3, 00007.  Epub June 06, 2023. ISSN 0186-1042.  https://doi.org/10.22201/fca.24488410e.2022.2938.

The franchise has been used as an expansion strategy, based on Know-how and the brand, which allows both the entrepreneur and the franchisor to obtain an economic benefit from said intangible assets. This work proposes a structure for the valuation of franchises using real options for three Colombian companies from different economic sectors, based on historical information from their Financial Statements, as well as market information to determine the cost of capital in order to discount cash flows. Future cash, the real option as a complement to the traditional valuation models allows, through binomial trees, to incorporate the uncertainty in the cash flows in order to estimate under simulations the royalty rate and the Initial franchise fee according to the conditions and performance of the sector.

Keywords : real options; franchising; Montecarlo simulation; valuation; intangible asset.

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