Lesson: Franchisee Accounting

In this lesson, explore the intriguing world of franchisee accounting with Nick Palazzolo, CPA, who uses real-world examples like Taco Bell, Dunkin' Donuts, and Subway to clarify the accounting treatment for franchise agreements. Discover how initial franchise fees, considered intangible assets, are recorded and amortized over the life of the franchise agreement. Get insight into ongoing franchise fees and how they are treated as royalties, being expenses for the franchisee and revenue for the franchisor. Nick also delves into the services offered by franchisors, such as management training and legal assistance, and their impact on both parties. Gain a foundational understanding of these concepts, which may not frequently appear on the exam, but are crucial to comprehend for those unexpected questions.