Recognition of franchise fee revenue is dependent on judgments of both substantial performance and fee collectibility.

Question

Quizplus · Accepted Answer

This is because recognition of franchise fee revenue requires the franchisor to have substantially performed its obligations under the franchise agreement, and also to determine that the franchisee is likely to pay the fees owed. Both of these judgments require management's judgment and expertise.

Recognition of Franchise Fee Revenue Is Dependent on Judgments of Both