Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu, and operational procedures. On June 1, a franchisee enters into a 5-year contract with Chipotle and pays a $250,000 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. Chipotle expects monthly sales at the franchise to be $100,000 per month based on extensive historical data. What amount of revenue will Chipotle Inc. record for the year? Group of answer choices: A.) $50,667 B.) $71,000 C.) $106,000 D.) $110,167
Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu, and operational procedures. On June 1, a franchisee enters into a 5-year contract with Chipotle and pays a $250,000 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. Chipotle expects monthly sales at the franchise to be $100,000 per month based on extensive historical data. What amount of revenue will Chipotle Inc. record for the year? Group of answer choices: A.) $50,667 B.) $71,000 C.) $106,000 D.) $110,167
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Chipotle Inc. grants franchisees the right to operate a franchise using the company’s name, menu, and operational procedures. On June 1, a franchisee enters into a 5-year contract with Chipotle and pays a $250,000 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. Chipotle expects monthly sales at the franchise to be $100,000 per month based on extensive historical data.
What amount of revenue will Chipotle Inc. record for the year?
Group of answer choices:
A.) $50,667
B.) $71,000
C.) $106,000
D.) $110,167
E.) $131,000
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