Franchising is comfortable way to start up your own business because its main advantage if that you are allowed to use the brand name and the expertise of a known business. But, you have to pay certain taxes and feed for the possibility to open a business under a certain brand in another location. Beside these fees, there is the franchise tax, which is a special tax those who open a franchise in another location or country have to pay.
The government has a series of advantages over imposing these franchise taxes.
The government may grant a certain foreign business that opens its gates in the country some advantages, an example being the land for the buildings. But in exchange for this, the government can ask for a share in the earnings of that company.
When setting up a franchise in another country, a company must not sell and produce articles that are prohibited by law from manufacturing or commercialization. The government takes taxes according to the financial documents presented by the company and it knows all the time what that company is producing and selling.
The government also gets an income from property taxes. Companies pay taxes in accordance to their value of property, the size of the business and the number of employees. The bigger a company is, the greater is the number of employees, and the greater is the company's business revenue, the bigger taxes it will have to pay to the government.
Another source of income for the government is the excise taxes. They are levied on the goods and services provided and sold by the franchise company. Again, the more service the company provides, the more goods it produces and sells, the greater the taxes will be and also the revenue of the government budget.