What is the name of the Accounting Standards Update (ASU) that Crown Gold Exchange has elected to adopt?

According to the 2024 Franchise Disclosure Document, Crown Gold Exchange has elected to adopt an Accounting Standards Update (ASU) to ASC 606. This update, issued by The Financial Accounting Standards Board (FASB), is titled 'Revenue from Contracts with Customers (Subtopic 952-606): Practical Expedient' in 2022. This update provides a practical way for private company franchisors to account for preopening services provided to a franchisee as distinct from the franchise license if the services are consistent with those included in a predefined list within the guidance.

For a prospective Crown Gold Exchange franchisee, this means that the franchisor is following a specific accounting standard that allows them to separate the revenue recognition for pre-opening services from the franchise license itself, under certain conditions. This potentially provides more clarity and accuracy in how the franchisor reports its revenue related to these services.

Specifically, Crown Gold Exchange will account for preopening activities provided to the franchisee that are not brand specific as a separate distinct performance obligation. This is because these activities provide relevant general business information that benefits the franchisee and are not highly interrelated or interdependent to the access of the Company's intellectual property. All other pre-opening activities that are highly interrelated and interdependent to the access of the Company's intellectual property will be accounted for as a single performance obligation, which is satisfied by granting certain rights to access the Company's intellectual property over the term of each franchise agreement.