When must an Exit franchise pay the Company Development Fee to Exit?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
enue is $2,500.00 or less.
e) Payment
EXIT Formula (U.S. Version Rev. 03.23.25)
Regional Development Fees are payable by Franchise to EXIT. Regional Development Fees are payable at the finalization of the Transaction Side and are deducted from the Sales Representative's portion of Commission.
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The maximum Regional Development Fees paid per calendar year per Sales Representative is $500 (pro-rated in the first calendar year).
8. Company Development Fee
- a) Franchise shall pay EXIT a Company Development Fee of ten percent (10%) of the first $100,000 of gross Commissions per calendar year earned and received by the Franchise for transactions generated by each Sales Representative, including the Broker and
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Company Development Fee is paid by the franchisee to Exit at the finalization of each transaction side via electronic funds transfer. All Company Development Fees will be deposited into a designated trust account by Exit upon receipt. The Company Development Fee is ten percent of the first $100,000 of gross commissions per calendar year earned and received by the Franchise for transactions generated by each Sales Representative, including the Broker and Franchisee. The maximum Company Development Fee per calendar year per Sales Representative is $10,000, pro-rated in the first calendar year. Commissions of $250.00 or less are not subject to Company Development Fees.
For a prospective Exit franchisee, this means that a portion of the commissions earned by their sales representatives will be remitted to Exit as a Company Development Fee. This fee is calculated per sales representative, based on their gross commissions, and is capped at a maximum amount per year. The franchisee must ensure that these fees are paid at the conclusion of each transaction.
It's important to note that the timing of the Company Development Fee payment is tied to the finalization of each transaction side. This implies that franchisees need to have systems in place to track transactions and remit the fees promptly. Additionally, the FDD specifies that all Company Development Fees shall be deposited into a designated trust account by EXIT upon receipt. This suggests that these funds are held separately by the franchisor, potentially for specific purposes outlined elsewhere in the agreement.