Franchisors have something to cheer about amidst the Coronavirus
crisis. This morning, the Federal Accounting Standards Board (FASB)
announced the delay of the ASC 606 revenue recognition rules for
one year. Knowing that revenue recognition rules have been a source
of confusion and uncertainty, FASB made the decision in an effort
to provide relief to franchisors during this difficult time.
True to their mission of
protecting, enhancing and promoting franchising, The International
Franchise Association (IFA) staff spent the last several weeks
engaging in important and direct conversations with FASB on the
subject. "While addressing the economic impacts of
COVID-19 has been our primary focus over the last month, we have
continued to press forward with our other franchising priorities,
particularly the 606 recognition rules as FDD filing deadlines loom
ahead," said Robert Cresanti, President of the IFA.
"Today's announcement is the result of that - it's even
more impressive that this delayed implementation is exclusive to
franchises," said Cresanti.
Following this morning's decision, FASB will begin the process
of taking public comment on an alternative accounting standard for
private sector businesses. "It will allow us to make the case that
certain pre-opening costs are earned immediately and should be
recognized as such," said Cresanti.
Knowing that many franchise brands have spent considerable time
and resources on filings to date, Cresanti encourages all
franchisors to consult with their legal and auditing firms
regarding any amendments that may be made to year-end audited