What method did All County use when adopting ASC 606?
All_County Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company adopted ASC 606 using the modified retrospective method for those contracts which were not substantially completed as of the transition date of January 01, 2020. There was no material impact to any of the line items within tKe &oPpDn's 6tDtePents of Income or Balance Sheets as a result of applying ASC 606 for the fiscal year ended December 31, 2024. Revenue from Contracts with Franchisee Revenue is recognized when control of the promised services is trDnsIerred to tKe &oPpDn's IrDnFKisees in Dn amount that reflects the consideration expected to be entitled to in exchange for those services.
Revenue from sales of individual franchises is recognized and earned for the initial non-recurring and non-refundable fee upon execution of the agreement with the franchisee whenever allowable under applicable state laws. The initial franchise fee is generally recognized ³ZKen DOO material services or conditions relating to the sale have been substantially perIorPed or sDtisIied E\ tKe IrDnFKisor´ (typically, upon the opening of the franchise location).
Source: Item 22 — Contracts (FDD page 43)
What This Means (2025 FDD)
According to All County's 2025 Franchise Disclosure Document, when adopting ASC Topic 606, Revenue from Contracts with Customers, All County used the modified retrospective method for contracts not substantially completed as of the transition date of January 1, 2020. All County also applied Topic 606 using the cumulative effect method by recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at January 1, 2020.
All County states that the adoption of ASC 606 did not have a material impact on the company's Statements of Income or Balance Sheets for the fiscal year ended December 31, 2024. Revenue from contracts with franchisees is recognized when control of the promised services is transferred to All County's franchisees in an amount that reflects the consideration expected in exchange for those services.
For a prospective franchisee, this means that All County has updated its accounting policies to comply with current standards (ASC 606) for recognizing revenue. The initial franchise fee is recognized when all material services or conditions relating to the sale have been substantially performed or satisfied by All County, typically upon the opening of the franchise location. Franchise fees received but not yet recognized as revenue are classified as deferred revenue in accordance with ASC 606.