New Revenue Recognition Guidance for Franchisors

February 19, 2021

The FASB has issued new guidance easing revenue recognition for franchisors that are not public business entities. The recently issued guidance addresses concerns raised by non-public companies regarding the complexity and cost of accounting for pre-opening services and the initial franchise fees under current revenue recognition standards.  For certain pre-opening services, franchisors will now be able to recognize the initial franchise fee as franchise locations are opened under this new guidance.