Part of the CPEA ASC 606: Revenue Recognition Series
Many entities act as franchisors, expanding and diversifying by franchising their businesses to franchisees. Franchising arrangements exist in many industries and take various forms, such as service sponsor-retailer, manufacturer-retailer, wholesaler-retailer, and manufacturer-wholesaler.
FASB ASC 952-605, Franchisors – Revenue Reognition, primarily provided the legacy U.S. generally accepted accounting principles (U.S. GAAP) for franchisor revenue recognition. FASB ASC 606 supersedes that guidance and establishes new accounting rules that substantially affect multiple areas of a franchisor’s financial reporting.