Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P545,872. The franchise has the option to purchase P120.000 of equipment for P96,000, franchise operations already stared. The amount of revenue from franchise fees is: a. P200.000 b. P721.872
Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000 paid when the agreement is signed and the balance in five annual payments. The present value of the future payments, discounted at 10%, is P545,872. The franchise has the option to purchase P120.000 of equipment for P96,000, franchise operations already stared. The amount of revenue from franchise fees is:
a. P200.000
b. P721.872
Atianzar and Cabalde Computers is a franchisor and provides a range of computing services hardware/software installation, repairs, dota backup, device syncing, and network solutions on popular Samsung, Dell, Acer and other PC devices. Each franchise agreement gives a franchisee the
right to open a Atianzar and Cabalde outlet and sell Atianzar and Cabalde products and services in the area for five (5) years. Under the contract, Atianzar and Cabaldes also provides the franchisee with a number of services to support and enhance the franchise brand, including:
• advising and consulting on the operations of the store;
• communicating new hardware and software developments and service techniques;
• providing business and training manuals; and
• advertising programs and training.
As on almost entirely service operation (all materials and other supplies are purchased as needed by customers), Atianzar and Cabalde provides few upfront services to franchisees. Instead, the franchisee recruits service technicians, who are given Atianzar and Cabaldes’ traning materials
(online manuals and tutorials), which are updated for technology changes on a monthly basis at a minimum.
Atianzar and Cabalde enters into a franchise agreement on December 15, 20x7, giving a franchisee the rights to operate a Atianzar and Cabalde franchise in Cagayan Valley for five (5) years. Atianzar and Cabalde charges an initial franchise fee of P975,000 for the right to operate as a franchisee,
payable upon signing the contract, Atianzar and Cabalde also receive ongoing royalty payments of 7% of the franchisee's annual sales (payable each January 15 of the following year). The franchise company records P16,575,000 of revenue for the year ended December 31. 20x8.
The franchisee revenue on December 31, 20x8 should be:
a. P1,160,250
b. P1,355,250
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