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Need some more background? Check out Income Wreck-ognition: Part I and Part II. and Part III: Survey Maximizing Income Recognition with Your Outside Auditors The adoption of the new income recognition standards will affect most franchisors as they pursue their 2019 audit in time to issue their FDD in 2020. The effort to maximize income recognition is not an all-or-nothing game. Based on our experience, auditors are all over the

I wanted to give you an update on what’s going on in California related to AB-5. The background appears below.  As things stand now, AB-5 goes into effect Jan. 1, 2020, but IFA believes that a franchise exemption is possible. Based on the criticism of several industry sectors, when the California Legislature reconvenes in January 2020, the bill’s sponsor, Assemblywoman Gonzalez has stated that she will introduce a follow-up to AB-5 to address

Need some more background? Check out Income Wreck-ognition: Part I and Part II. As we have worked with some of our 200 brands, we have noticed a pattern among auditors – the pattern being that there is no pattern. The more parochial firms categorically reject the concept of recognizing any income upfront and require the entire initial fee to be amortized. Others seem to go through the appropriate exercise: the

Did you miss Part I? Check it out here. Given the robust activity around my recent post on Income Wreck-ognition, I think I have your attention. As a refresher, the upcoming changes in auditing practices require a franchisor to amortize the initial franchise fee over the term of the franchise agreement – unless it relates to any “distinct” performance obligations. The effect could be to reduce your income recognition by

We are just around the corner from the deadline to comply with the new income recognition rules, which will likely “loot” much of the capitalization of an emerging franchisor.  The restatement will likely have the effect of driving many rapidly growing franchisors’ capital into the negative — jeopardizing (un-impounded) state registrations and impairing franchisee diligence. Here’s what up tarting with the 2019 audit (for privately held companies), all initial fees which

It’s never too early for an emerging franchisor to start thinking about franchisee compliance. Lauren Coe, CEO and owner of Snapology, remembers all too well being at her first Springboard and brushing off calls from other, more experienced franchisors to prepare for dealing with uncooperative franchisees. Coe admits regret at not having taken the message more seriously several years ago. “I sat here like you,” she said to fellow franchisors

Deciding whether to provide financial information in an Item 19 can be a challenging process for emerging franchiors.  You want to have a good answer when a prospective franchisee asks the question “how much can I make?” In the panel titled “Item 19: Using Your FDD as a Sales Tool” at the Springboard Conference in Philadelphia on September 19, 2019, several experts discussed the benefits of providing an Item 19