Originally Posted by
tail wheel
Franchise fees are normally either a fixed sum, percentage of turn over or combination of both.
The franchisor provides a name, business system and goodwill. The franchisee takes the business risk.
$15 mill for Virgin Australia is probably reasonable as franchises go.
The arrangement with Branson isn't a franchise, it's a brand licencing agreement. With a franchise you ordinarily get access to business systems, training, group marketing, product and the like. Under a brand licence agreement you get to display the brand, typically within fairly rigid guidelines on usage. They are markedly different commercial arrangements.
The main thing keeping Branson at the table at the moment is the confluence of the one-off cost of rebranding (it'd likely be $8-12 million just to repaint the fleet) and the typically short term focus of new investors. Just back-of-the-napkin, assuming no leakage on loyalty, ditching Branson and rebranding would only become NPV positive on a 3-4+ year investment horizon.