- 28 -
McDonald's name and trademark." Id. at 248 (fn. ref. omitted).
In addition, we stated:
The right to use the McDonald's system, trade name, and
trademarks is the essence of the McDonald's franchise.
* * * Respondent did not identify, and we cannot
discern, any quantifiable goodwill that is not
attributable to the franchise. We find that
petitioners acquired no goodwill that was separate and
apart from the goodwill inherent in the McDonald's
franchise.
[T]he franchise acts as the repository for goodwill
* * * [Id. at 249; fn. ref. omitted; emphasis added.]
We concluded that the goodwill produced by the McDonald's system
was embodied in, and inseverable from, the McDonald's franchise
that the taxpayer received.20
Similarly, in Montgomery Coca-Cola Bottling Co. v. United
States, 222 Ct. Cl. 356, 381-382, 615 F.2d 1318, 1331-1332
(1980), the Court of Claims, in valuing a Coca-Cola franchise,
explained:
Defendant's expert has testified that there is no
goodwill in a Coca-Cola bottling operation. Anything
resembling goodwill attaches solely to the national
company and the name of the product * * *. Customers
buy Coca-Cola because of * * * the product, not because
of who bottles it. Since goodwill is considered to be
the value of the habit of customers to return to
purchase a product at the same location, the absence of
the product would destroy the value of the habit; and
since only one entity has the perpetual right to
distribute Coca-Cola in a territory, the value of
20Although Canterbury v. Commissioner, 99 T.C. 223 (1992),
involved a sale by a franchisee, we find its analysis of this
issue applicable to the instant case as well.
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