Karen Kirbey Grants Pamela Prentiss a Franchise to Sell Handcrafted

Karen Kirbey grants Pamela Prentiss a franchise to sell handcrafted gifts. Pamela pays Karen 15 percent of all revenue. Sales for 2012 were $550,000. How will Karen treat the payment she receives on her 2012 return?

A) $82,500 short-term capital gain
B) $82,500 long-term capital gain
C) $82,500 ordinary income
D) No gain or income