Franchise fees are properly recognized as revenue
A) when received in cash.
B) when a contractual agreement has been signed.
C) after the franchise business has begun operations.
D) after the franchiser has substantially performed its service.

Question

Quizplus · Accepted Answer

Franchise fees are recognized as revenue after the franchiser has substantially performed its service. This is because revenue recognition principles require that revenue is recognized when it is earned and the service is performed, not merely upon receipt of cash or signing of an agreement.

Franchise Fees Are Properly Recognized as Revenue