Mcdonalds - Franchise fee = $45,000 Fee Start up Costs = $489,000-$1.5 million R
ID: 3438074 • Letter: M
Question
Mcdonalds -
Franchise fee = $45,000
Fee Start up Costs = $489,000-$1.5 million
Royalty Fee = 12.5%
Arby's -
Franchise fee = $25,000- $37,500
Fee Start up Costs = $333,000-$2 million
Royalty Fee = 4%
General Nutrition Inc-
Franchise fee = $30,000
Fee Start up Costs = $132,000-$182,000
Royalty Fee = 6%
Tastee-Freez-
Franchise fee = $5,000
Fee Start up Costs = $39,000
Royalty Fee = 4%
Question: For each franchise, calculate how much you would owe the franchiser in royalties if you made $1 million in sales.
Explanation / Answer
McDonalds
Royalty fee to be paid = 12.5% of $1,000,000 = $125,000
Arby's -
Royalty fee to be paid = 4% of $1,000,000 = $40,000
General Nutrition Inc.
Royalty fee to be paid = 6% of $1,000,000 = $60,000
Tastee Freez
Royalty fee to be paid = 4% of $1,000,000 = $40,000