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The question

What is the ruling on commercial franchise contracts that include a one-time lump-sum payment for the trade name, training, and mixtures, in addition to paying a percentage of sales (not profits) regardless of the store's profitability?

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Source: FtawySummarized from the full answer at Ftawy · imported Sep 2, 20261 min readAlso available in العربية
The answer

It is permissible to buy and rent a trade name because it is a valuable benefit. It is also permissible to pay money for training and for purchasing recipes. These are all permissible forms that fall between sale and lease.

However, paying 5% of sales for a trade name is questionable due to the uncertainty of the rent.

If you will continuously supply the restaurant with recipes, you can sell them daily or monthly, or participate with them in exchange for a percentage of the profit. This is a partnership based on offers, and it is a condition that what is contributed to the partnership must be valued to calculate profit and loss.

Summarized from the full answer at Ftawy · imported

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Source platform
Ftawy
Original fatwa ID
29881
Imported
Translation status
Source text, unreviewed
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