{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/606/952/","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","number":"606-952","topic":"606","title":"Franchisors","area":"Revenue","paragraphs":16,"summary":"This subtopic gives franchisors that are not public business entities a practical expedient for identifying performance obligations under Topic 606. Rather than applying the general distinct analysis to the franchise license, a private franchisor may treat listed pre-opening services (site selection, facility assistance, training, manuals, bookkeeping/IT/advisory, quality control) as distinct from the franchise license, and may further elect as an accounting policy to treat all such pre-opening services as a single performance obligation. The expedient affects only step 2 of the model; allocation of transaction price and timing of recognition still follow Topic 606.","concepts":["franchise license","pre-opening services","practical expedient","performance obligation identification","distinct goods or services","accounting policy election","sales-based royalty","non-public business entity"],"categories":["Revenue","Recognition","Disclosure","Industry-specific"],"level":"intermediate","topic_title":"Revenue from Contracts with Customers","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-00-1","para":"00-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">The following table identifies the changes made to this Subtopic.</div> <div class=\"norm-text\"> <table class=\"asc-table\" id=\"SL125986956-241986\"> <tr> <td class=\"entry\"> <strong class=\"ph b\">Paragraph</strong> </td> <td class=\"entry\"> <strong class=\"ph b\">Action</strong> </td> <td class=\"entry\"> <strong class=\"ph b\">Accounting Standards Update</strong> </td> <td class=\"entry\"> <strong class=\"ph b\">Date</strong> </td> </tr> <tr> <td class=\"entry\"></td> <td class=\"entry\"></td> <td class=\"entry\"></td> <td class=\"entry\"></td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/c/#contract\" class=\"term\" title=\"An agreement between two or more parties that creates enforceable rights and obligations.\"><span>Contract</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/c/#customer\" class=\"term\" title=\"A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.\"><span>Customer</span></a> (1st def.)</td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/f/#franchise-agreement\" class=\"term\" title=\"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.\"><span>Franchise Agreement</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/f/#franchisor\" class=\"term\" title=\"The party who grants business rights (the franchise) to the party (the franchisee) who will operate the franchised business.\"><span>Franchisor</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/n/#not-for-profit-entity\" class=\"term\" title=\"An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.\"><span>Not-for-Profit Entity</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/p/#performance-obligation\" class=\"term\" title=\"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.\"><span>Performance Obligation</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/p/#public-business-entity\" class=\"term\" title=\"A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.\"><span>Public Business Entity</span></a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/glossary/s/#security\" class=\"term\" title=\"A share, participation, or other interest in property or in an entity of the issuer or an obligation of the issuer that has all of the following characteristics: It is either represented by an instrument issued in bearer or registered form or, if not represented by an instrument, is registered in books maintained to record transfers by or on behalf of the issuer. It is of a type commonly dealt in on securities exchanges or markets or, when represented by an instrument, is commonly recognized in any area in which it is issued or dealt in as a medium for investment. It either is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations.\"><span>Security</span></a> (2nd def.)</td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-05-1\" class=\"xref\">952-606-05-1</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-15-1\" class=\"xref\">952-606-15-1</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-15-2\" class=\"xref\">952-606-15-2</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <div class=\"xref-range displayInline\"><a href=\"/asc/606/952/#606-952-25-1\" class=\"xref\">952-606-25-1 through 25-4</a></div> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-50-1\" class=\"xref\">952-606-50-1</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-50-2\" class=\"xref\">952-606-50-2</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <div class=\"xref-range displayInline\"><a href=\"/asc/606/952/#606-952-55-1\" class=\"xref\">952-606-55-1 through 55-5</a></div> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> <tr> <td class=\"entry\"> <a href=\"/asc/606/952/#606-952-65-1\" class=\"xref\">952-606-65-1</a> </td> <td class=\"entry\">Added</td> <td class=\"entry\"> <a href=\"/updates/asu-2021-02/\" class=\"xref\">Accounting Standards Update No. 2021-02</a> </td> <td class=\"entry\">01/28/2021</td> </tr> </table> </div> </div>","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContract | Added | Accounting Standards Update No. 2021-02 | 01/28/2021 |\nCustomer (1st …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2be92619eba380d78aa841e76afad88f8a2c736fa7a9ed221d055e82cab94023","downloaded_from":"2026-09-09T23:18:34.884Z","last_downloaded_at":"2026-09-09T23:18:34.884Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478380","source_sha256":"5f9e191bf35fc25020d125e2a5991322ccd6bd87e454a1f3b9dc1d08cbabe9c7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5b4dd375531e045f33f44d79433291471615d3a32fb8b0df74a216ea8f167f03","downloaded_from":"2026-09-09T23:18:34.884Z","last_downloaded_at":"2026-09-09T23:18:34.884Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478380","source_sha256":"5f9e191bf35fc25020d125e2a5991322ccd6bd87e454a1f3b9dc1d08cbabe9c7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2a9bcad966289c48a8a86313d2b1a8529c7f726dcf925cc2c97e7eb1090cc73f","downloaded_from":"2026-09-09T23:18:34.884Z","last_downloaded_at":"2026-09-09T23:18:34.884Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478380","source_sha256":"5f9e191bf35fc25020d125e2a5991322ccd6bd87e454a1f3b9dc1d08cbabe9c7"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-05-1","para":"05-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E5D4685-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic addresses a practical expedient for revenue recognition for a <a href=\"/glossary/f/#franchisor\" class=\"term\" title=\"The party who grants business rights (the franchise) to the party (the franchisee) who will operate the franchised business.\"><span>franchisor</span></a> that is not a <a href=\"/glossary/p/#public-business-entity\" class=\"term\" title=\"A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.\"><span>public business entity</span></a>.</span></span> </div> </div>","snippet":"This Subtopic addresses a practical expedient for revenue recognition for a franchisor that is not a public business entity.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29f87bb2317109e05eabdad7202b1519b7e229a15e825c1b9ec5c997c0991c15","downloaded_from":"2026-09-09T23:18:37.156Z","last_downloaded_at":"2026-09-09T23:18:37.156Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478397","source_sha256":"d03cd23353e78e111be76cfe8f89a2767d41fabf10926d4a58c72860046615e6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b8d72d8f9eccb74b82e21b29fd8f756ce82e7e6c04eb8eb6192d5ce6ceee58a","downloaded_from":"2026-09-09T23:18:37.156Z","last_downloaded_at":"2026-09-09T23:18:37.156Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478397","source_sha256":"d03cd23353e78e111be76cfe8f89a2767d41fabf10926d4a58c72860046615e6"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d493c97ed04dc8751a556e691f5c25987b10267c274a5d56bc6ceafa768bc7fb","downloaded_from":"2026-09-09T23:18:37.156Z","last_downloaded_at":"2026-09-09T23:18:37.156Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478397","source_sha256":"d03cd23353e78e111be76cfe8f89a2767d41fabf10926d4a58c72860046615e6"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-15-1","para":"15-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E67AD54-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section <a altsource=\"GUID-3EBF3D80-B7F0-485A-AA4A-2ED18955A8A3.ditamap\" class=\"ditamap\">952-10-15</a>.</span></span> </div> </div>","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 952-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f17ccb4ec3dc73eccfb31c42bb9f14b9aaf010cdd7d57f06efbc5d08e662e0e7","downloaded_from":"2026-09-09T23:18:39.750Z","last_downloaded_at":"2026-09-09T23:18:39.750Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478076","source_sha256":"76d36f86226a411f61c044affec51d4564fa69d343394a0672ddd9076c59d6ba"}},{"citation":"606-952-15-2","para":"15-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E67AE3B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A <a href=\"/glossary/p/#public-business-entity\" class=\"term\" title=\"A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.\"><span>public business entity</span></a> shall not apply the guidance in this Subtopic. Entities that are not within the scope of this Subtopic shall not apply the guidance in this Subtopic directly or by analogy.</span></span> </div> </div>","snippet":"A public business entity shall not apply the guidance in this Subtopic. Entities that are not within the scope of this Subtopic shall not apply the guidance in this Subtopic directly or by analogy.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6659534fa5509d58cd1d895ccaeb6de736ff1cd23fc8f83e1e00bbab2bf9705","downloaded_from":"2026-09-09T23:18:39.750Z","last_downloaded_at":"2026-09-09T23:18:39.750Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478076","source_sha256":"76d36f86226a411f61c044affec51d4564fa69d343394a0672ddd9076c59d6ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b19c8910e9ff0c451974b26e48665ffe6d5ecfd1040096bbaf95830ca68207b9","downloaded_from":"2026-09-09T23:18:39.750Z","last_downloaded_at":"2026-09-09T23:18:39.750Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478076","source_sha256":"76d36f86226a411f61c044affec51d4564fa69d343394a0672ddd9076c59d6ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cdb95eac5ed49953b487739ae85ebde0680ae9f4d8c641f91ffcd1117fee021a","downloaded_from":"2026-09-09T23:18:39.750Z","last_downloaded_at":"2026-09-09T23:18:39.750Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478076","source_sha256":"76d36f86226a411f61c044affec51d4564fa69d343394a0672ddd9076c59d6ba"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E761B76-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Revenue shall be recognized in accordance with Topic <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a>, Revenue from Contracts with Customers.</span></span> </div> </div>","snippet":"Revenue shall be recognized in accordance with Topic 606, Revenue from Contracts with Customers.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:767f8e3b031bc528a175a6d8633dc4acf80e3a37489e1394ff40f364b7ed6dea","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}},{"citation":"606-952-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E761D0A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">As a practical expedient, when applying the guidance in Topic <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a>, a <a href=\"/glossary/f/#franchisor\" class=\"term\" title=\"The party who grants business rights (the franchise) to the party (the franchisee) who will operate the franchised business.\"><span>franchisor</span></a> that enters into a <a href=\"/glossary/f/#franchise-agreement\" class=\"term\" title=\"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.\"><span>franchise agreement</span></a> may account for the following pre-opening services as distinct from the franchise license:</span></span> <ol class=\"ol-norm\"> <li class=\"li-norm\"><span class=\"linum\">a</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E761E25-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Assistance in the selection of a site</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">b</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E761EF2-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Assistance in obtaining facilities and preparing the facilities for their intended use, including related financing, architectural, and engineering services, and lease negotiation</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">c</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E761FB7-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Training of the franchisee's personnel or the franchisee</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">d</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E762091-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Preparation and distribution of manuals and similar material concerning operations, administration, and record keeping</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">e</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E762160-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">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</span></span> </div> </li> <li class=\"li-norm\"><span class=\"linum\">f</span> <div class=\"p\"> <span class=\"sfragment\" id=\"sfr_1E76225C-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Inspection, testing, and other quality control programs.</span></span> </div> </li> </ol> </div> </div>","snippet":"As a practical expedient, when applying the guidance in Topic 606, a franchisor that enters into a franchise agreement may account for the following pre-opening services as distinct from the franchise license:\n(a) Assist…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6aa81bbf964484a92e4c34ba5806664c3dc93d808dc6e5b37d375efc1842ed1","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}},{"citation":"606-952-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E762379-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A franchisor that elects the practical expedient in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a> shall apply the guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/606/10/#606-10-25-19\" class=\"xref\">606-10-25-19 through 25-22</a></div> 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 <a href=\"/glossary/p/#performance-obligation\" class=\"term\" title=\"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.\"><span>performance obligation</span></a>.</span></span> </div> </div>","snippet":"A franchisor that elects the practical expedient in paragraph 952-606-25-2 shall apply the guidance in paragraphs 606-10-25-19 through 25-22 to determine whether the pre-opening services are distinct from one another unl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7a87b5959f00a543322b52e53b3cf67b9cacf9ccd2769b46d1d40cf9765e8996","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}},{"citation":"606-952-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E76257F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The practical expedient in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a> 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 <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a> 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 <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a>, the entity shall apply the guidance in Topic <a altsource=\"GUID-90450890-CA59-4C9A-A88C-D53D3DE3192F.ditamap\" class=\"ditamap\">606</a> on identifying performance obligations.</span></span> </div> </div>","snippet":"The practical expedient in paragraph 952-606-25-2 applies only to identifying performance obligations. An entity shall apply this guidance consistently to contracts with similar characteristics and in similar circumstanc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40c7ca18a2b0e68123f5e005d627085d81e08d053fd8e2d3ef379a049143d305","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7fff14c324cec191f4ea1b21c1590449d458bb3ac1fa2ca934a9517dc8ff1809","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f122a799c6e010ba80587485387957ee6ebcfd165f8b935ef9cb6cca5bc79bc","downloaded_from":"2026-09-09T23:18:44.720Z","last_downloaded_at":"2026-09-09T23:18:44.720Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478488","source_sha256":"9bb263af126a0399bc61d51dda368a5a8f04d584549e321aa86d357e5c90d421"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-50-1","para":"50-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E800B5B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">If an entity elects to use the practical expedient in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a>, the entity shall disclose that fact.</span></span> </div> </div>","snippet":"If an entity elects to use the practical expedient in paragraph 952-606-25-2, the entity shall disclose that fact.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d55cab6981dd7422c284b598a3cad6f4d08fe9737b7d839116a2c18bb312c841","downloaded_from":"2026-09-09T23:18:46.856Z","last_downloaded_at":"2026-09-09T23:18:46.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477654","source_sha256":"b5a6ff2eb5c24ceec48aefcbfa3202020bce577becb2e026ee730c3231017c46"}},{"citation":"606-952-50-2","para":"50-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E800C63-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity that makes the accounting policy election to recognize pre-opening services as a single performance obligation as described in paragraph <a href=\"/asc/606/952/#606-952-25-3\" class=\"xref\">952-606-25-3</a> shall disclose that fact.</span></span> </div> </div>","snippet":"An entity that makes the accounting policy election to recognize pre-opening services as a single performance obligation as described in paragraph 952-606-25-3 shall disclose that fact.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f072583044d565a438fefe21fcfeaa67dd7fd09cb3e01f1ce52a5ff761fd62f","downloaded_from":"2026-09-09T23:18:46.856Z","last_downloaded_at":"2026-09-09T23:18:46.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477654","source_sha256":"b5a6ff2eb5c24ceec48aefcbfa3202020bce577becb2e026ee730c3231017c46"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06c179fa33415bb688753d15889c4aee436c4290fdf0cba4e02150a25694e94e","downloaded_from":"2026-09-09T23:18:46.856Z","last_downloaded_at":"2026-09-09T23:18:46.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477654","source_sha256":"b5a6ff2eb5c24ceec48aefcbfa3202020bce577becb2e026ee730c3231017c46"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de35ae7540c0feee3f610cfff3725c3eb1f88941eb099e68fa5e9f9c41b48150","downloaded_from":"2026-09-09T23:18:46.856Z","last_downloaded_at":"2026-09-09T23:18:46.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477654","source_sha256":"b5a6ff2eb5c24ceec48aefcbfa3202020bce577becb2e026ee730c3231017c46"}},{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"606-952-55-1","para":"55-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E8CA01A-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity enters into a <a href=\"/glossary/c/#contract\" class=\"term\" title=\"An agreement between two or more parties that creates enforceable rights and obligations.\"><span>contract</span></a> with a <a href=\"/glossary/c/#customer\" class=\"term\" title=\"A party that has contracted with an entity to obtain goods or services that are an output of the entity's ordinary activities in exchange for consideration.\"><span>customer</span></a> and promises to grant a franchise license to open a restaurant location. The franchise license term is 10 years. In addition to the license, the entity also promises to provide two services related to the opening of the franchise location—site selection and training. The entity receives a fixed fee of $25,000, as well as a sales-based royalty of 5 percent of the customer's sales for the term of the license. The fixed consideration of $25,000 is payable on or before the opening of the restaurant location.</span></span> </div> </div>","snippet":"An entity enters into a contract with a customer and promises to grant a franchise license to open a restaurant location. The franchise license term is 10 years. In addition to the license, the entity also promises to pr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:891a135b0088635c2d85310361787d93693501de0d6d0de58a2cf1f88f1233c0","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}},{"citation":"606-952-55-2","para":"55-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E8CA137-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The entity first assesses whether it is eligible for the practical expedient for identifying <a href=\"/glossary/p/#performance-obligation\" class=\"term\" title=\"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.\"><span>performance obligations</span></a> in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a>. The entity determines that it is eligible because it is not a <a href=\"/glossary/p/#public-business-entity\" class=\"term\" title=\"A public business entity is a business entity meeting any one of the criteria below. Neither a not-for-profit entity nor an employee benefit plan is a business entity. It is required by the U.S. Securities and Exchange Commission (SEC) to file or furnish financial statements, or does file or furnish financial statements (including voluntary filers), with the SEC (including other entities whose financial statements or financial information are required to be or are included in a filing). It is required by the Securities Exchange Act of 1934 (the Act), as amended, or rules or regulations promulgated under the Act, to file or furnish financial statements with a regulatory agency other than the SEC. It is required to file or furnish financial statements with a foreign or domestic regulatory agency in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer. It has issued, or is a conduit bond obligor for, securities that are traded, listed, or quoted on an exchange or an over-the-counter market. It has one or more securities that are not subject to contractual restrictions on transfer, and it is required by law, contract, or regulation to prepare U.S. GAAP financial statements (including notes) and make them publicly available on a periodic basis (for example, interim or annual periods). An entity must meet both of these conditions to meet this criterion. An entity may meet the definition of a public business entity solely because its financial statements or financial information is included in another entity's filing with the SEC. In that case, the entity is only a public business entity for purposes of financial statements that are filed or furnished with the SEC.\"><span>public business entity</span></a>, it is a <a href=\"/glossary/f/#franchisor\" class=\"term\" title=\"The party who grants business rights (the franchise) to the party (the franchisee) who will operate the franchised business.\"><span>franchisor</span></a> that is within the scope of Topic <a altsource=\"GUID-A7117CC4-0AD4-465D-AF82-495EBAFCD36F.ditamap\" class=\"ditamap\">952</a>, and it has entered into a franchise agreement with a customer.</span></span> </div> </div>","snippet":"The entity first assesses whether it is eligible for the practical expedient for identifying performance obligations in paragraph 952-606-25-2. The entity determines that it is eligible because it is not a public busines…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0860a12d63ca6e901fb162839954fdd53180677e076f7f2a78332cc92a60f352","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}},{"citation":"606-952-55-3","para":"55-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E8CA269-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">In applying the practical expedient, the entity compares its pre-opening services (training and site selection) to the list of services in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a> instead of applying the guidance in paragraph <a href=\"/asc/606/10/#606-10-25-19\" class=\"xref\">606-10-25-19</a>. The entity determines that those services may be accounted for as distinct from the franchise license because they are consistent with the list of services in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a>. The entity makes an accounting policy election to account for all pre-opening services that are consistent with the list in paragraph <a href=\"/asc/606/952/#606-952-25-2\" class=\"xref\">952-606-25-2</a> as a single performance obligation. Therefore, the entity determines that it has two performance obligations—a franchise license and pre-opening services.</span></span> </div> </div>","snippet":"In applying the practical expedient, the entity compares its pre-opening services (training and site selection) to the list of services in paragraph 952-606-25-2 instead of applying the guidance in paragraph 606-10-25-19…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:091a0ef493da4287da95ae350992feed2a19d1c3b993d57b4d61ff40ee5ac121","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}},{"citation":"606-952-55-4","para":"55-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E8CA39F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The entity then applies the guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/606/10/#606-10-32-28\" class=\"xref\">606-10-32-28 through 32-45</a></div> to allocate the transaction price to the performance obligations and the guidance in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/606/10/#606-10-25-23\" class=\"xref\">606-10-25-23 through 25-37</a></div> and <a href=\"/asc/606/10/#606-10-55-65\" class=\"xref\">606-10-55-65 through 55-65B</a> to determine when and how to recognize revenue for satisfaction of the performance obligations.</span></span> </div> </div>","snippet":"The entity then applies the guidance in paragraphs 606-10-32-28 through 32-45 to allocate the transaction price to the performance obligations and the guidance in paragraphs 606-10-25-23 through 25-37 and 606-10-55-65 th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:26c3940f1d0680bc5b378a1d202464d3921fe7910792f3234f96b5ed396fbb32","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}},{"citation":"606-952-55-5","para":"55-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"> <span class=\"sfragment\" id=\"sfr_1E8CA4BC-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">The entity discloses its use of the practical expedient and its accounting policy election to treat the pre-opening services as a single performance obligation in accordance with the disclosure requirements in paragraphs <div class=\"xref-range displayInline\"><a href=\"/asc/606/952/#606-952-50-1\" class=\"xref\">952-606-50-1 through 50-2</a></div>.</span></span> </div> </div>","snippet":"The entity discloses its use of the practical expedient and its accounting policy election to treat the pre-opening services as a single performance obligation in accordance with the disclosure requirements in paragraphs…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ad2ec7c517a7537870fd7c613acdf6c7be40a4a8746615aab6dca565d6da1fe5","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c596db92f183a54a2c88cc85559270a24c5d7420f3596b87d53b5cc75593e80f","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f15c45499b814fa5281ba26136e48b1ba0f85b93723c68229fc68928a7e06497","downloaded_from":"2026-09-09T23:18:49.155Z","last_downloaded_at":"2026-09-09T23:18:49.155Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479146","source_sha256":"1d2b123e14545b5f175487f2262cd028989d5e6362392da4a0d0e1e5e116328a"}},{"number":"65","label":"65 Transition and Open Effective Date Information","anchor":"65-transition-and-open-effective-date-information","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"606-952-65-1","para":"65-1","html":"<div class=\"asc-body\"><div class=\"norm-text\">Paragraph superseded on 12/14/2022 after the end of the transition period stated in Accounting Standards Update No. 2021-02, <em class=\"ph i\">Franchisors—Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient</em>.</div> </div>","snippet":"Paragraph superseded on 12/14/2022 after the end of the transition period stated in Accounting Standards Update No. 2021-02, Franchisors—Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1237ee9a1c874d068b0460e5f7e1e34a183e88d1bb46dc6ee1f81670ba4d13b4","downloaded_from":"2026-09-09T23:18:51.476Z","last_downloaded_at":"2026-09-09T23:18:51.476Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477702","source_sha256":"efff11806448baba5411a01160b286912f69b671f11286803575c93d23cdc7ee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76981c69913972accb72c403229715d2e06279fe0f62838c9f368745d294d1a9","downloaded_from":"2026-09-09T23:18:51.476Z","last_downloaded_at":"2026-09-09T23:18:51.476Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477702","source_sha256":"efff11806448baba5411a01160b286912f69b671f11286803575c93d23cdc7ee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13f92fa91d6b1de21e535d74c12d03786400572051e7ade2f7e6a42abcb5600b","downloaded_from":"2026-09-09T23:18:51.476Z","last_downloaded_at":"2026-09-09T23:18:51.476Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477702","source_sha256":"efff11806448baba5411a01160b286912f69b671f11286803575c93d23cdc7ee"}}],"enrichment":{"summary":"This subtopic gives franchisors that are not public business entities a practical expedient for identifying performance obligations under Topic 606. Rather than applying the general distinct analysis to the franchise license, a private franchisor may treat listed pre-opening services (site selection, facility assistance, training, manuals, bookkeeping/IT/advisory, quality control) as distinct from the franchise license, and may further elect as an accounting policy to treat all such pre-opening services as a single performance obligation. The expedient affects only step 2 of the model; allocation of transaction price and timing of recognition still follow Topic 606.","key_points":["Revenue is recognized under Topic 606; this subtopic only provides a practical expedient (952-606-25-1).","A franchisor may account for the six categories of pre-opening services listed in 952-606-25-2 as distinct from the franchise license.","If the expedient is elected, the franchisor still applies 606-10-25-19 through 25-22 to determine whether the pre-opening services are distinct from one another, unless it makes an accounting policy election to treat them as a single performance obligation (952-606-25-3).","The expedient applies only to identifying performance obligations and must be applied consistently to contracts with similar characteristics and in similar circumstances; allocation and recognition follow Topic 606 (952-606-25-4).","If the expedient is not elected, or the services do not match the list, the franchisor applies the general Topic 606 performance obligation guidance (952-606-25-4).","A public business entity shall not apply this guidance, and entities outside its scope may not apply it directly or by analogy (606-952-15-2).","Election of the practical expedient and of the single-performance-obligation policy must each be disclosed (952-606-50-1 through 50-2)."],"categories":["Revenue","Recognition","Disclosure","Industry-specific"],"audience_level":"intermediate","student_note":"Exam traps: the expedient is available only to non-public franchisors and only for step 2 (identifying performance obligations)—it does not change transaction price allocation, the sales-based royalty constraint, or the timing of revenue recognition. Also note the two separate elections (the expedient itself, and the single-performance-obligation policy), each with its own disclosure requirement.","related_topics":["606-10","952-10","952-605","340-40"],"key_concepts":["franchise license","pre-opening services","practical expedient","performance obligation identification","distinct goods or services","accounting policy election","sales-based royalty","non-public business entity"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ce5a22fad39fa6bf5acdffff83190e294508113aa53c898d3c21d1f0c8514f2","downloaded_from":"2026-09-09T23:18:34.884Z","last_downloaded_at":"2026-09-09T23:18:51.476Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"340-40","title":"Contracts with Customers","topic_title":"Other Assets and Deferred Costs","score":0.6983,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ed733dfbcfbb0b4b322bd7697b0566f1d3d5281b3d2b68f44e6a67afeefca7b","downloaded_from":"2026-09-09T23:56:07.379Z","last_downloaded_at":"2026-09-09T23:56:34.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"605-952","title":"Franchisors","topic_title":"Revenue Recognition","score":0.6955,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:68dd4e6d6ff81858b6ced5b58dfd9701b590351b64ea146e3ca77d1e864721a2","downloaded_from":"2026-09-10T00:50:14.020Z","last_downloaded_at":"2026-09-10T00:50:38.705Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"605-980","title":"Regulated Operations","topic_title":"Revenue Recognition","score":0.6684,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac3c1def0fae81b119aadc5cbd81bd330a0ff161fb6ecb6af60d6737ef8c73e3","downloaded_from":"2026-09-10T00:53:45.930Z","last_downloaded_at":"2026-09-10T00:54:08.764Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"606-10","title":"Overall","topic_title":"Revenue from Contracts with Customers","score":0.6669,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bed1254241961ef7f3f319597af06b1f9b37e2d2de73ec94161e27bba7eb38c0","downloaded_from":"2026-09-09T23:17:50.449Z","last_downloaded_at":"2026-09-09T23:18:32.707Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"720-15","title":"Start-Up Costs","topic_title":"Other Expenses","score":0.6668,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f7cedecd3ddf86c13d35d448d4e8dc9a62b9af19be1fb2ce12370db01630d53c","downloaded_from":"2026-09-10T01:06:59.231Z","last_downloaded_at":"2026-09-10T01:07:15.369Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"860-50","title":"Servicing Assets and Liabilities","topic_title":"Transfers and Servicing","score":0.6539,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:87dea96f589b346d10f95a4664e3f6ad58d69453fad39dd4acd928eabf9137e9","downloaded_from":"2026-09-10T02:08:04.325Z","last_downloaded_at":"2026-09-10T02:08:35.803Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"606-10","title":"Overall","topic_title":"Revenue from Contracts with Customers","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c6778629ff0bc2bd8ffd9802ca67e9f7cb29e62fdad0f22963ffb0cd94a73efd","downloaded_from":"2026-09-09T23:17:50.449Z","last_downloaded_at":"2026-09-09T23:18:32.707Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"610-10","title":"Overall","topic_title":"Other Income","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20195e9787212058eb917b5bac16ed14dd064358bd2923dd2d0bc6e9de1a667e","downloaded_from":"2026-09-10T00:54:36.973Z","last_downloaded_at":"2026-09-10T00:54:45.197Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:443d8b9825fc1971bced8740c8e2e748652671c08453e0351c061757973bfb0d","downloaded_from":"2026-09-09T23:18:34.884Z","last_downloaded_at":"2026-09-09T23:18:51.476Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}