Revenue for franchisors under US GAAP 2021 KPMG Handbook

This April 2021 edition expands on our existing ASC 606 guidance for franchisors to incorporate insights on the adoption of ASU 2021-02, which simplifies how private company franchisors analyze certain activities when determining their performance obligations in a franchise agreement.


  • Companies with franchisor operations

Key impacts

ASC 606 impacts the following areas:

  • Entirely new accounting model that may affect the timing of revenue recognition, in particular for upfront fees
  • Sales-based royalties will usually be recognized when franchisee sales occur
  • Performance obligations are the new unit of account. Upfront activities and ongoing goods or services to franchisees may be affected
  • Accounting for advertising fund contributions and expenses will change for most franchisors
  • New framework for assessing franchise contracts modifications and transfers

Download from KPMG Financial Reporting View

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