What accounting standards codification guidance did Healthsource Chiropractic adopt in relation to revenue from contracts with customers?

According to Healthsource Chiropractic's 2025 Franchise Disclosure Document, the company's financial presentation adheres to Generally Accepted Accounting Principles (GAAP) in the United States. These principles are detailed within the Accounting Standards Codifications (ASC) issued by the Financial Accounting Standards Board. This means that Healthsource Chiropractic follows a standardized set of rules and guidelines when preparing its financial statements.

For a prospective franchisee, this indicates that Healthsource Chiropractic's financial reporting is structured and consistent, allowing for easier comparison with other franchise systems or businesses. The use of GAAP and ASC provides a level of transparency and credibility to the financial information presented in the FDD. This is important for making informed decisions about investing in a Healthsource Chiropractic franchise.

Specifically, regarding revenue recognition, Note M in Item 23 of the FDD details how Healthsource Chiropractic recognizes revenue from franchise agreements, royalty payments, termination fees, national ad fund contributions, and technology fund payments. For instance, revenue from franchise agreements is recognized from the sale or transfer of chiropractic franchises, with sales prices for new franchises ranging from $45,000 to $60,000 depending on the number of franchises purchased, while the transfer of a franchise is $10,000. Royalty payments are computed at seven percent (7%) of sales and are payable monthly. This level of detail helps potential franchisees understand how different revenue streams are accounted for by Healthsource Chiropractic.