Scenario 5-2. Connie is considering opening a small bakery called Connie's Cookie Cupboard. She loves to bake cookies. Family and friends have told her she should consider opening a small business using her baking skills. Connie has no business experience and no idea where to start in opening her own business. She also has very few funds available. One day she is glancing through the newspaper and notices an ad for a bakery franchise that would like to open an outlet in the local mall. This franchise provides everything from equipment to packaging to full business services. She decides to look into the opportunity further.
Connie decides to pursue her franchise opportunity further. The bakery franchise looks promising. Since she has a limited amount of funds, no business experience, and no idea how to start a new business, she is seriously considering purchasing the bakery franchise located in the local mall. She obtains a copy of the document that will legally bind her.
-In Scenario 5-2, as Connie is reading through the agreement, she sees that a percentage of her gross sales will be paid to the franchisor. These are called ______.
A) franchise fees
B) royalty fees
C) advertising fees
D) operation fees

Question

Quizplus · Accepted Answer

Royalty fees are payments made by the franchisee to the franchisor, typically based on a percentage of the franchisee's gross sales. This is a common practice in franchise agreements.