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Best Subs Inc. grants franchisees the right to operate a restaurant using the company's name, menu, and operational procedures. On March 1, a franchisee enters
Best Subs Inc. grants franchisees the right to operate a restaurant using the company's name, menu, and operational procedures. On March 1, a franchisee enters into a 4-year contract with Best Subs Inc. and pays a $900,000 initial franchise fee. The franchisee also pays $60,000 for equipment for the restaurant with a delivery date scheduled in 10 days. Per the contract, the franchisee will also pay a royalty equal to 3% of the franchisee sales over the contract life. The commission for the month of March is estimated to be $18,000 based upon Best Subs Inc. extensive experience with new franchises. What amount of revenue will Best Subs Inc. record on March 1? Select one: O a. $96,750 O b. $900,000 O O O O C. $18,750 d. $978,000 e. $0 f. $36,750
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