1. You are considering opening a restaurant and franchising it through Subway. You estimate annual sales of $400,000 for the first year with revenue increases in years two and three of 8% and years four and five of 10% per year Using the information found in Exhibit 3 (Page 69) determine the total franchising cost and respective % of sales for each of the five years. Assume the initial fee is paid in year one. (4pts) Part I: Lodging Initial Fee Royalty Advertising/Reservation Marketing Fee Franchisor Clarion Hotels, Suites, Resorts, and (S35,000 Carriage House Inns minimum) Hampton Inns & Suites Hawthorn Suites $300 per room 4.25% of gross room revenues 2% of gross room revenues 1.25% of gross room revenues 4% of gross room revenuesroom revenues 5% of gross room revenues room revenuesmarketing fees 5% of gross room revenuesroom revenues other fees 5% of gross room revenues $45,000 4% of gross 2.5% of gross 4% of gross 2.5% of gross included irn other fees $40,000 ($400 per room $75,000 included in included in included in Hilton Hotels Holiday Inn Hotels & Resorts S500 per room ($40,000 minimum) 50,000 other fees 0.3% of gross 1.75% of gross room revenues Omni Hotels Franchising Corp. 3% of gross room revenues 3.5% of gross room revenuesroom revenues 2.1% of gross room revenues $300 per room ($35,000 minimum): 4% of gross room revenueS Hotels/Suites . room revenues suites: $50,000 minimum Radisson Hotels & Resorts $500 per room or $75,000 (minimum) 4% of gross room revenues 4.5% of gross room included in revenues marketing fee Sheraton Hotels & Resorts $40,000 plus $400 for each room over 100 5% of gross room revenues 1% of gross room revenues .8% of gross room revenues plus channel fees Part Il: Restaurants Total Investment Initial Royalty Advertising/ Marketing Fee Franchisor McDonalds Camille's Sidewalk Caf 2yng Asian Cril Long John Silvers A&W Restaurants Subway KFC Five Cuys Burgers and Fries Fee Fee" 210,000-470,000 250,000-350.000 150,000-2,000,000 75,000-1,500,000 65,000-184,000 1,1 00,000-1, 700,000 150,000-360,000 $506,000-$833,000 $45,000 25,000 25,000 15,000 15,000 0,000 25,000 25,000 5% 5% 5% 8% 6% 1% Based on gross sales