Each month Tobias must report his gross sales and pay a percentage of that amount to his franchisor.This percentage is:
A)negotiable every month.
B)finance charges.
C)royalty fees.
D)an investment cost.

Question

Quizplus · Accepted Answer

The percentage that Tobias pays to his franchisor each month is referred to as a "royalty fee." This is a typical component of franchising agreements, in which franchisees pay a percentage of their sales to the franchisor in exchange for access to the franchisor's brand, support, and systems. Option A is incorrect, as royalty fees are typically set in the franchise agreement and are not typically subject to negotiation on a monthly basis. Option B is incorrect, as finance charges typically refer to interest payments on loans or credit card balances, which are not applicable here. Option D is incorrect, as an investment cost would typically refer to the initial fees and expenses required to start a franchise, rather than ongoing payments like royalty fees.

Each Month Tobias Must Report His Gross Sales and Pay