F&B Groups · Track 2 · Tutorial 2 of 2
Account for royalties from part-owned restaurants
A brand royalty from a restaurant the group only part-owns raises two questions: whether to eliminate all of it, and whether to eliminate it at all. The answer depends on whether the group controls the restaurant.
1Know what depends on who owns the restaurant
The brand company charges every restaurant a royalty of 5% of sales. In October 2026 Restaurant B, 60% owned by the group, pays 10,000, and Restaurant D, 40% owned and an associate, pays 6,000. The treatment depends on how each restaurant is held:
| Restaurant | Held as | The royalty |
|---|---|---|
| Restaurant A, 100% | Subsidiary | Eliminated in full. |
| Restaurant B, 60% | Subsidiary with 40% NCI | Eliminated in full, not 60% of it: all intragroup income and expenses are eliminated, whatever the NCI (IFRS 10.B86). |
| Restaurant D, 40% | Associate | Not eliminated. Restaurant D isn’t consolidated, and a royalty for the month’s use of the brand leaves no unrealised profit in its assets. |
| A franchisee outside the group | Not held | Revenue for the group. |
Eliminating Restaurant B’s royalty removes 10,000 of income and 10,000 of expense, so group profit doesn’t change, and nor does the NCI. The minority shareholders own 40% of Restaurant B’s profit after the royalty it really pays.
2Check how each restaurant is held
- Open Ownership & Equity → Ownership.
- Under Group structure, read the badge on each restaurant: Subsidiary or Associate/JV.
- Click Restaurant B. NCI % shows 40%. Click Restaurant D. Method shows Equity.
If a restaurant is shown the wrong way, its ownership record is missing or has the wrong relationship. See Record an acquisition and its acquisition details.
3Eliminate the royalties from subsidiaries
Clear Restaurant A’s and Restaurant B’s royalties under Franchise Royalties, as in Clear intercompany items in an F&B group: a rule, or an entry each month.
- Open Intercompany → Franchise Royalties, choose Oct-2026, and click Add a new Elimination Entry.
- Under Debit Lines, choose the brand company and its royalty income from Restaurant B, 10,000.00.
- Under Credit Lines, choose Restaurant B and its royalty expense, 10,000.00. Click Confirm.
Enter the full amount. BrizoConsol works out the NCI from Restaurant B’s own figures, so the elimination doesn’t change it.
4Leave the associate’s royalty in
Don’t add Restaurant D to a rule or an entry. Its royalty stays in the brand company’s revenue, and with its figures loaded BrizoConsol posts the group’s 40% share of its profit, after the royalty, as one line. See Account for associates and joint ventures.
A rule clears whatever is on its accounts. If the brand company books every restaurant’s royalty to one income account, a rule on it would also take out Restaurant D’s. Give the brand company separate royalty income accounts for subsidiaries and for associates and outside franchisees, or clear the subsidiaries’ royalties with entries.
Check
On the group’s Profit & Loss for Oct-2026 with Show Entities on, the royalty income from Restaurants A and B and their royalty expense are zero in the group column, and Restaurant D’s 6,000 is still in revenue. On Ownership & Equity → NCI Report for Restaurant B, the NCI share of profit is 40% of Restaurant B’s profit after the royalty.
5If something goes wrong
| Royalty revenue is lower than expected | A rule also clears an associate’s or an outside franchisee’s royalty. Move those royalties to their own accounts, or replace the rule with entries. |
|---|---|
| The NCI’s share of profit looks too high or too low | Check Restaurant B’s own profit, after the royalty, and its NCI % on the Ownership page. The elimination doesn’t change it. |
| Restaurant D shows as Subsidiary | Its ownership record has the relationship Subsidiary. Edit it to JV / Associate. |
Want more detail? See the documentation