What must an Exit franchisee ensure regarding sales representatives' transaction reporting?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall accurately report to Subfranchisor and EXIT, all transactions upon which Franchisee or its agents or sales representatives receive commission, including, by way of example and not limitation, rentals, leases and sales of land, commercial buildings, residential units, condominiums and mobile homes, and shall timely remit and pay transaction fees and other continuing fees due with respect to each transaction. Franchisee shall ensure that all sales representatives accurately report all such transactions to Franchisee and that all sales representatives who perform services with or through joint sales and marketing groups, or "teams," accurately report such activity, participation and their transactions in MEMO. Franchisee, or if Franchisee is an entity, all equity holders of Franchisee, must also ensure that all their transactions are accurately reported in MEMO and that all applicable fees, including but not limited to Company Development Fees, are paid. These payments are due immediately upon the finalization of each transaction.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, franchisees must ensure that their sales representatives accurately report all transactions for which they receive a commission. This includes rentals, leases, and sales of land, commercial buildings, residential units, condominiums, and mobile homes. Furthermore, sales representatives who work within joint sales and marketing groups or teams must accurately report their activity, participation, and transactions in Exit's proprietary software, MEMO.
This requirement ensures that Exit franchisees, subfranchisors, and Exit itself have a clear and accurate record of all transactions occurring within the franchise system. Accurate reporting is crucial for calculating and remitting transaction fees and other continuing fees, which are due immediately upon the finalization of each transaction. The franchisee is ultimately responsible for the accuracy of these reports, even those submitted by their sales representatives.
For a prospective Exit franchisee, this means implementing systems and procedures to verify the accuracy of sales representatives' transaction reports. This may involve training sales representatives on proper reporting procedures, regularly auditing transaction data, and utilizing the MEMO software effectively. Failure to ensure accurate reporting can lead to discrepancies, potential audits, and financial penalties, including interest charges on underpayments and responsibility for audit costs if underpayments exceed 5% of the amount due.