Photo by Andy Feliciotti on Unsplash
For all our franchisor subscribers; we think this is big news especially in these trying time. Robert Cresanti- President and CEO of the International Franchise Association (IFA) have just notched a major victory in the battle regarding ASC 606 and the Franchise Revenue Recognition Rule.
Below is the Letter Mr. Cresati emailed to IFA members announcing the good news.
Dear IFA Member:
I am writing to share an important, exciting – and non-coronavirus – piece of good news. This morning, the Federal Accounting Standards Board (FASB) delayed implementation of their ASC 606 revenue recognition rules for one year!
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.
Over the last several weeks, IFA staff and members have had several important and direct conversations with FASB, including with the current Chair, Russell Golden, and other members of the Board and technical staff. Today’s announcement is the result of that – it’s even more impressive that this delayed implementation is exclusive to franchises!
Following this morning’s decision, FASB will begin the process of taking public comment on an alternative accounting standard for private sector businesses (an “expedient”) that will allow us to make the case that certain pre-opening costs are earned immediately and should be recognized as such. IFA will keep you abreast of developments as we prepare our public comments.
We appreciate FASB’s efforts to provide relief to the franchising sector during this unprecedented time and thank them for their unanimous decision. Understanding that many franchise brands have spent considerable time and resources on filings to date, we encourage you to discuss with your legal and auditing firms whether any amendments may be made to year-end audited financial statements.
In the meantime, please don’t hesitate to reach out to Suzanne Beall with any questions. We hope this bit of good news provides you with a little hope in the midst of the crisis.
Robert Cresanti, CFE
President & CEO
International Franchise Association