June 30, 2020 | Chugh

Day: June 30, 2020

Franchisors to Adopt New Accounting Standards for Recognizing Revenue

Under recent guidance from the Financial Accounting Standards Board (FASB), franchisors can only recognize revenue from initial franchise fees in their financial statements after they perform services that are distinct from the franchise agreement. Otherwise, they must recognize the revenue over the term of the agreement. This change can have a significant effect on franchisors’ financial statements, particularly those that are in the start-up or growth phases.

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