Revenue Recognition for Franchisors

Franchisors may be in for major changes in the way they recognize franchise revenues in the future. For years, relevant U.S. generally accepted accounting principles (GAAP) had been subject to significant interpretation across the industry, primarily because the standards were broadly written—leaving them open to interpretation and subject to judgment. However, in May 2014, the Financial Accounting Standards Board (FASB), the organization that establishes U.S. GAAP, issued a new standard intended to converge U.S. GAAP and International Financial Reporting Standards (IFRS).

You can download a white paper on the impact the new FASB regulations will impact how leases get accounted for.