When did Mr. Sandless adopt ASC-606 and ASU 2021-02, and using what method?

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 this adoption was the modified retrospective method.

For a prospective franchisee, this information is relevant because it indicates how Mr. Sandless recognizes and reports revenue. ASC-606 is a comprehensive framework for revenue recognition, and its adoption ensures that Mr. Sandless's financial statements are prepared in accordance with current accounting standards. The modified retrospective method means that Mr. Sandless applied the new revenue recognition standard to existing contracts from the beginning of the adoption period (January 1, 2020) but did not restate prior periods.

Understanding the revenue recognition policies can help a franchisee better interpret Mr. Sandless's financial statements and assess the company's financial performance. It also provides insight into how franchise fees and other revenue streams are accounted for, which can impact the reported profitability and financial health of the franchise system.