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be compensation for services rendered and it must be
reasonable in amount. * * *
The complete test for royalty fees is that they
are fair and reasonable and are paid for services
rendered. * * *
Mr. Ciarrocchi had entered into a fair and reason-
able, arm’s-length license agreement with Ogden Enter-
tainment prior into [sic] his entering into a fair and
reasonable license agreement with the taxpayer [peti-
tioner]. Since Ogden was willing to pay 11% of gross
revenues (plus a $10,000.00 up-front bonus) to Mr.
Ciarrocchi for his minimal participation, then the
taxpayer in this matter should have expected to pay
much more for Mr. Ciarrocchi’s full participation and
creativity.
In further support of petitioner’s position, petitioner
asserts:
Ogden was permitted to use the name “Chickie’s and Pete’s”
and the “Crabfries�” product only; Chickie’s and Pete’s,
Inc. [petitioner] was permitted to use the name, and all of
the many and varied products, recipes, spices and tech-
niques. These additional items should more than double, and
maybe even triple, the amount of royalty paid by Petitioner.
The higher percentage royalty for a larger amount and vari-
ety of items is “fair and reasonable”. * * *
We turn first to petitioner’s contention that, pursuant to
the Ogden license agreement, Ogden was allowed to use, in addi-
tion to the name “Chickie’s and Pete’s”, only the “Crabfries�”
product, and not any of the other “many and varied products,
recipes, spices and techniques” that petitioner claims it was
permitted to use under petitioner’s license agreement. On the
record before us, we reject that contention. Ogden’s license
agreement did not in any way limit the products of Chickie’s and
Pete’s that Ogden was permitted to sell at Ogden’s Veterans
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