Question

Enok, a prospective franchise owner, is looking to keep his monthly costs as low as possible. The franchisor he is checking out is advertising that royalty payments of 8% of sales could be as high as $300,000 per month. The franchisor is claiming that a franchisee can expect monthly sales to be as high as

Answer 1

$3,750,000

Step-by-step explanation:

Generally franchisors (company that hands out the right to open a franchise) or licensors (company that hands out the right to produce and sell their products in other markets) charge a royalty fee (periodic payment) for the right of being able to operate a franchise or a license. In this case, the royalty fee = 8% of total sales per month, and if the estimated royalty payment is $300,000, then total sales per month should be:

total sales per month = $300,000 / 8% = $3,750,000

Answer 2

$3,750,000

Step-by-step explanation: