How Franchising Arrangements Could Apply in Transfer Pricing

31 December 2007
By Dr. Emmanuel Llinares and Nihan Mert-Beydilli

In this article from International Tax Review's Intellectual Property Supplement, NERA Director Dr. Emmanuel Llinares and Vice President Nihan Mert-Beydilli examine the economics of franchising, which can be defined as a vertically integrated relationship between a franchise and a franchisor. The authors discuss how franchising offers an interesting context and potential source of valuable qualitative and quantitative information for transfer pricing analysis. It may provide an appropriate framework for analyzing intra-group transactions, including potentially in industries where third-party franchising is generally not observed.

This article first appeard in the sixth edition of International Tax Review's Intellectual Property supplement, December 2007. For more information, please visit