Summary of Statement No. 45

Accounting for Franchise Fee Revenue (Issued 3/81)

Summary

This Statement extracts the specialized accounting principles and practices from the AICPA Industry Accounting Guide, Accounting for Franchise Fee Revenue, and establishes accounting and reporting standards for franchisors. It requires that franchise fee revenue from individual and area franchise sales be recognized only when all material services or conditions relating to the sale have been substantially performed or satisfied by the franchisor. This Statement also establishes accounting standards for continuing franchise fees, continuing product sales, agency sales, repossessed franchises, franchising costs, commingled revenue, and relationships between a franchisor and a franchisee.