# ASC 606-952-25: Revenue from Contracts with Customers — Franchisors — 25 Recognition Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/606/952/#25-recognition) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:18:44.720Z to 2026-09-09T23:18:44.720Z Record version: sha256:4f122a799c6e010ba80587485387957ee6ebcfd165f8b935ef9cb6cca5bc79bc Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 606-952-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/606/952/#25-recognition) SEC content: no ##### [606-952-25-1](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:44.720Z to 2026-09-09T23:18:44.720Z Record version: sha256:767f8e3b031bc528a175a6d8633dc4acf80e3a37489e1394ff40f364b7ed6dea Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Revenue shall be recognized in accordance with Topic 606, Revenue from Contracts with Customers. ##### [606-952-25-2](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:44.720Z to 2026-09-09T23:18:44.720Z Record version: sha256:a6aa81bbf964484a92e4c34ba5806664c3dc93d808dc6e5b37d375efc1842ed1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As a practical expedient, when applying the guidance in Topic 606, a [franchisor](https://asc.understandingaccounting.org/glossary/f/#franchisor "The party who grants business rights (the franchise) to the party (the franchisee) who will operate the franchised business.") that enters into a [franchise agreement](https://asc.understandingaccounting.org/glossary/f/#franchise-agreement "A written business agreement that meets the following principal criteria: The relation between the franchisor and franchisee is contractual, and an agreement, confirming the rights and responsibilities of each party, is in force for a specified period. The continuing relation has as its purpose the distribution of a product or service, or an entire business concept, within a particular market area. Both the franchisor and the franchisee contribute resources for establishing and maintaining the franchise. The franchisor's contribution may be a trademark, a company reputation, products, procedures, manpower, equipment, or a process. The franchisee usually contributes operating capital as well as the managerial and operational resources required for opening and continuing the franchised outlet. The franchise agreement outlines and describes the specific marketing practices to be followed, specifies the contribution of each party to the operation of the business, and sets forth certain operating procedures that both parties agree to comply with. The establishment of the franchised outlet creates a business entity that will, in most cases, require and support the full-time business activity of the franchisee. (There are numerous other contractual distribution arrangements in which a local businessperson becomes the authorized distributor or representative for the sale of a particular good or service, along with many others, but such a sale usually represents only a portion of the person's total business.) Both the franchisee and the franchisor have a common public identity. This identity is achieved most often through the use of common trade names or trademarks and is frequently reinforced through advertising programs designed to promote the recognition and acceptance of the common identity within the franchisee's market area. The payment of an initial franchise fee or a continuing royalty fee is not a necessary criterion for an agreement to be considered a franchise agreement.") may account for the following pre-opening services as distinct from the franchise license: 1. a Assistance in the selection of a site 2. b Assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation 3. c Training of the franchisee's personnel or the franchisee 4. d Preparation and distribution of manuals and similar material concerning operations, administration, and record keeping 5. e Bookkeeping, information technology, and advisory services, including setting up the franchisee's records and advising the franchisee about income, real estate, and other taxes or about regulations affecting the franchisee's business 6. f Inspection, testing, and other quality control programs. ##### [606-952-25-3](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:44.720Z to 2026-09-09T23:18:44.720Z Record version: sha256:7a87b5959f00a543322b52e53b3cf67b9cacf9ccd2769b46d1d40cf9765e8996 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A franchisor that elects the practical expedient in paragraph [952-606-25-2](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-2) shall apply the guidance in paragraphs [606-10-25-19 through 25-22](https://asc.understandingaccounting.org/asc/606/10/#606-10-25-19) to determine whether the pre-opening services are distinct from one another unless it makes an accounting policy election to account for the pre-opening services as a single [performance obligation](https://asc.understandingaccounting.org/glossary/p/#performance-obligation "A promise in a contract with a customer to transfer to the customer either: A good or service (or a bundle of goods or services) that is distinct A series of distinct goods or services that are substantially the same and that have the same pattern of transfer to the customer."). ##### [606-952-25-4](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:18:44.720Z to 2026-09-09T23:18:44.720Z Record version: sha256:40c7ca18a2b0e68123f5e005d627085d81e08d053fd8e2d3ef379a049143d305 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The practical expedient in paragraph [952-606-25-2](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-2) applies only to identifying performance obligations. An entity shall apply this guidance consistently to contracts with similar characteristics and in similar circumstances. An entity should see Topic 606 for guidance on the remaining aspects of recognizing revenue from contracts with customers, including allocating the transaction price and recognizing revenue. If an entity elects not to apply the practical expedient or if the services performed are not consistent with the list in paragraph [952-606-25-2](https://asc.understandingaccounting.org/asc/606/952/#606-952-25-2), the entity shall apply the guidance in Topic 606 on identifying performance obligations.