Overheard in the franchise world with Ryan Bernal

In his monthly column, Ryan Bernal gives us the inside track on franchise expansion news, deals and other hot topics

• December was a slower than usual month for franchise news. Perhaps, in America, the pending impeachment of the President, in the U.K. a general election, or perhaps the holiday season slows down everything franchise sales-wise for the month. Whatever the reason, a slow news month does not mean a ‘no news month’. Franchising, and the many facets franchising encompasses, always has news to share. If you have news to share from the franchise world, please send an email to the author, Ryan Bernal at: ryan@larenterprise.com.

• Revisiting from last month, McDonald’s makes the news again, this time with a bigger impact. Forget about the ex-CEO being removed, and definitely avoid asking how much his exit package was. Instead, look to the California Federal Court of Appeals, where in October it was decided that McDonald’s does not have enough control over franchisees and employees of franchisees to be held responsible for the actions of the employees. All franchisors would agree that the model of selling a franchise is not to become responsible for the employees the franchisee hires; if that were the case, it would be better to own and operate multiple locations. However, the lawsuits do not stop there for McDonald’s: some McDonald’s employees believe McDonald’s headquarters is responsible for attacks on employees by customers because of the location of the establishment, low counters, drive-thru windows, and restaurant layouts. These lawsuits would move away from the Federal Appeals decision, and now focus on what the franchisor can do to ensure workplace safety.

• In new news: to buy or not to buy a franchise in December? While franchise units that benefit from retail sales see a boost during the holidays, the number of people ready to purchase a franchise in December seemingly drops. While economies where franchising is prevalent continue to strengthen, franchise professionals remain optimistic about the year ahead.

• Revenue recognition has changed. Accounting Standards Codification 606 (ASC 606) – or International Financial Reporting Standards 15 (IFRS-15) – is here and all franchisors need to be abreast of the changes. As a reminder, franchising in America is governed by the Generally Accepted Accounting Principles (GAAP), which is, in part, why the change in codes applies to franchisors. Lane Fisher of Fisher-Zucker LLC covered the details in-depth with his two-part series. Read Part I and Part II on LinkedIn today and make sure your accountant is fully aware of the changes and how the changes will affect your accounting and income recognition.

• Canadian-based Ctrl V, the first virtual reality arcade in North America (possibly the world), is now the largest chain of virtual reality arcades spanning three countries and two continents in three years. Ctrl V is redefining the commercial recreation industry by offering access to high-quality, affordable, multiplayer virtual reality experiences for all ages. In addition to impressive growth, the company raised nearly $50,000 at its 4th annual 24-Hour Extra Life Charity Event, in support of the Children’s Miracle Network Hospitals. Stay up-to-date with Ctrl V and read more about their impressive growth here: ctrlv.ca

• Speculative Conversation: Last month we focused on the growth of at-home workout alternatives and the impact they will have on fitness franchises. This month we learn about Ctrl V, a virtual reality arcade growing globally in three years. Are people devaluing their social interactions and preferring virtual ones? Are people more comfortable with artificial intelligence than they are with humans? I’d be interested to hear your thoughts on the subject.