For Exit franchises, what is the purpose of the Regional Development Fee?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
00 | $7.50 | $10.00 | $13.33 | | U.S. Charitable Fund | $1.67 | $5.00 | $7.50 | $10.00 | $13.33 |
These allocations are applied against the EXIT portion of each Transaction Fee after the Transaction Fee has been divided as provided in the Subfranchise Agreement between the Subfranchisor and EXIT.
The maximum Transaction Fees paid per calendar year per Sales Representative is $2,700 (pro-rated in the first calendar year).
7. Regional Development Fees
The Regional Development Fee is a fee used for the regional growth and development through advertising and promotion only within the Subfranchise region in which it is generated. Each Transaction Side is subject to the following Regional Development Fees payable to EXIT immediately upon the finalization of each transaction:
a) Regional Development Fees (Residential and Commercial)
Each Transaction Side is subject to a Regional Development Fee of $35. However, minimum Commission transactions generating a gross Commission of $2,500 or less will not be subject to a Regional Development Fee.
b) Partial Commissions
All Regional Development Fees for Commissions on all properties that are paid in installments either before or after the closing date of the transaction will be calculated in the same manner as noted in paragraph 7.a). For example, each installment of Commission will be entered into EXIT's computer reporting system separately and the Regional Development Fee will be calculated using the same formula that is used for all tra
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, the Regional Development Fee is designated for regional growth and development through advertising and promotion specifically within the subfranchise region where the fee is generated. Each transaction side is subject to this fee, which is $35, and is payable to Exit immediately upon the finalization of each transaction. However, transactions generating a gross commission of $2,500 or less are exempt from this fee.
For Exit franchisees, this means that a portion of their transaction fees will contribute directly to local advertising and promotional activities. This structure aims to foster growth within their specific subfranchise region. The fee is collected at the time each transaction is finalized, impacting the franchisee's cash flow in real-time. The $2,500 commission threshold provides a break for smaller transactions, potentially easing the financial burden on franchisees dealing with lower-value deals.
Furthermore, the FDD specifies how the Regional Development Fees are handled for partial commissions and referrals. For commissions paid in installments, the fee is calculated for each installment separately. In the case of referrals between Exit offices, the fee is split proportionally to the commission earned by each office. This ensures that the Regional Development Fee is consistently applied across different types of transactions and commission structures within the Exit franchise system.
Prospective franchisees should consider the impact of these fees on their overall profitability and marketing strategy. Understanding how these funds are used in their specific region and how they align with their business goals is crucial for making an informed investment decision. Additionally, franchisees should inquire about the specific advertising and promotional activities funded by the Regional Development Fee in their area to assess the potential return on investment.