Final answer:
Franchisors report continuing franchise fees as revenue when they are earned and receivable, which is true and in accordance with the accrual basis of accounting.
Step-by-step explanation:
It is true that franchisors generally report continuing franchise fees as revenue when they are earned and receivable. This accounting practice aligns with the accrual basis of accounting, where income is reported in the financial statements when it is earned, regardless of when the cash is received. These continuing franchise fees, often referred to as royalty fees, are typically a percentage of the franchisee's sales or a fixed periodic amount, and are recognized as revenue by the franchisor over the period the associated services are provided.