What is the subtopic number for franchisors' revenue from contracts with customers that Bombs Away references?

According to Bombs Away's 2024 Franchise Disclosure Document, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) to ASC 606, specifically addressing franchisors' revenue from contracts with customers. This update is identified as Subtopic 952-606. The update provides a practical way for private company franchisors to account for pre-opening services distinctly from the franchise license, provided these services align with a predefined list in the guidance. Bombs Away has chosen to adopt this new accounting standard.

This means that Bombs Away can treat certain pre-opening services, like general business training, separately from the franchise license itself for accounting purposes. This is particularly relevant if these services are not brand-specific and offer independent value to the franchisee. By adopting this standard, Bombs Away aims to more accurately reflect the value and timing of revenue recognition associated with different aspects of the franchise offering.

For a prospective Bombs Away franchisee, this accounting practice may not have an immediate operational impact. However, it provides insight into how Bombs Away recognizes revenue and manages its financial reporting. Understanding these accounting nuances can be helpful for franchisees when reviewing the franchisor's financial statements and assessing the overall financial health and stability of the Bombs Away franchise system.