Question

In his search for a franchised business that would satisfy his passion for the outdoors and also earn him a decent living, Asher noted that the shared profit criterion required of franchisors had significant variance. Some required franchisees to pay 8% of their monthly revenues to the franchisor. Others required 3% of the profits. In business we refer to this obligation as a ______________.

Answer 1

In business we refer to this obligation as a royalty.

Explanation:

A royalty is a charge paid by one person, such as the licensee or franchisee, to somebody else who owns a specific asset such as the rights holder or franchise owner, for the ability to utilize that asset on a continuing basis.This is usually accepted as a percentage of total or total profit obtained through the use of an product or a certain value per unit sold from an item of this kind, although there are still other forms and measures of revenue.

For an illustration, the royalty value for having its e-copy or printing a book like a novel, for selling internationally ranges from 20 to 30% of the overall value of retail selling that the publisher or distributor receives. The fee is paid by them and as with all music royalties, refers to the arrangement (license) between both the writer and the publisher or distributor.