On January 1, 2025, Betty Martin signed an agreement, covering 5 years, to operate as a franchisee of Cullumber Inc. for an initial franchise fee of $48,000. The amount of $11,000 was paid when the agreement was signed, and the balance is payable in five annual payments of $7,400 each, beginning January 1, 2026. The agreement provides that the down payment is nonrefundable and that no future services are required of the franchisor once the franchise commences operations on April 1, 2025. Betty Martin's credit rating indicates that she can borrow money at 12% for a loan this type.