Question

You want to become a franchise sub shop owner. You have narrowed your options down to two different franchises. Subs-R-Us will charge you a flat monthly fee of $2000 and no additional royalty fee. Bigtime Subs will charge you a $1200, but also wants to charge you a royalty of a dollar pre sub. How many subs would you have to sell a month for the franchise fees to be the same?​

Answer 1

To determine the number of subs needed to sell per month for the franchise fees between Subs-R-Us and Bigtime Subs to be the same, an equation is set up comparing the flat monthly fee to the fee plus royalty. Solving this equation reveals that 800 subs per month are needed for the fees to be equivalent.

Step-by-step explanation:

A franchise is a business model that allows an individual (franchisee) to start their business by leveraging the brand and business system of an established company (franchisor). For this, the franchisee pays a franchise fee and often an ongoing royalty fee.

In your scenario, you are considering two franchises for a sub shop. Subs-R-Us charges a flat franchise fee of $2000 per month with no royalty, while Bigtime Subs requires a franchise fee of $1200 monthly plus a $1 royalty per sub sold. To find the number of subs you need to sell for the two franchise fees to be equivalent, we set up the following equation:

2000 = 1200 + 1(x),

where x represents the number of subs sold. Solving for x gives us:

x = 2000 - 1200,

x = 800 subs.

Therefore, you would need to sell 800 subs in a month for the franchise fees from Subs-R-Us and Bigtime Subs to be the same.