If you are a franchisor and you charge a royalty of 5% on revenue and you have franchisees that have revenues of $1 million, $2 million, $1.5 million, and $2.5 million, how much would you earn in royalties?
A) $3,500,000
B) $3,000,000
C) $300,000
D) $350,000

Question

Quizplus · Accepted Answer

To calculate the royalties earned, we add up the revenues of all the franchisees and multiply it by the royalty rate. 
Total revenue = $1 million + $2 million + $1.5 million + $2.5 million = $7 million 
Royalties earned = 5% of $7 million = $350,000. Therefore, the correct answer is D) $350,000.

If You Are a Franchisor and You Charge a Royalty