When did Mr. Sandless adopt ASC-606 and ASU 2021-02, and what method was used for the adoption?

According to Mr. Sandless's 2025 Franchise Disclosure Document, the company adopted ASC-606 and ASU 2021-02 starting January 1, 2020. The method used for the adoption was the modified retrospective method.

For a prospective franchisee, this means that Mr. Sandless has updated its accounting practices to comply with current standards for revenue recognition. ASC-606 provides a framework for recognizing revenue from contracts with customers, ensuring that revenue is recognized when the goods or services are transferred to the customer. ASU 2021-02 is an update to accounting standards.

The use of the modified retrospective method indicates that Mr. Sandless applied the new standards to existing contracts from January 1, 2020, without restating prior periods. This approach is a common way to transition to new accounting standards, balancing accuracy with practicality.

Understanding these accounting standards and their adoption can help a franchisee better interpret Mr. Sandless's financial statements and understand how revenue is recognized, which is crucial for assessing the financial health and performance of the franchise.