Final answer:
The statement that franchisors report continuing franchise fees as revenue when they are earned and receivable is true, as it complies with the accrual accounting principles.
Step-by-step explanation:
Franchisors generally report continuing franchise fees as revenue when they are earned and receivable. The statement is True. This accounting practice aligns with the accrual basis of accounting, which recognizes revenue when it is earned, regardless of when payment is received. As franchisors provide ongoing services such as training, supply chain support, and operational assistance to their franchisees, the corresponding franchise fees are considered earned. Moreover, these fees are typically part of a contractual agreement and are therefore receivable, allowing franchisors to record them as revenue.