Non-tangible business values

As you have learned this week, ratios by themselves do not provide much value unless they are compared to those of previous accounting periods.  Also, ratios do not measure a companies "intellectual capital assets" when assessing a company's true worth.  These may include brand name, growth potential, human or intellectual capital, etc.

Consider brand name for a moment.  If you were in the market to purchase a franchised food operation, how much value would you put in its brand name?  Sometimes referred to as Goodwill, purchasing a brand name business franchise can be up to 50% or even 60% of the total cost to purchase the business.  As this is not anything tangible, can "brand name"offer a franchise that much value?

Couldn't you simply copy a franchised product line and open up under your own name?  Support your thoughts on brand name worth by providing advantages and disadvantages of purchasing a "brand name" franchised operation.

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