With what institution are Exit's brokered certificates of deposit placed?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
From the fees generated from each sale or lease transaction, a portion of the fee is paid to EXIT to be deposited in various separate funds administered by EXIT or its affiliate. Currently deposits are made into the following funds: United States Charitable Fund, United States Creative Fund, United States Advertising Fund, Regional Development Fund and Administrative Fund. None of the funds are audited. The Charitable Fund is administered by EXIT and is used by EXIT to make donations to a United States charity or charities selected by EXIT. The United States Creative Fund is administered by EXIT and used to create concepts and programming used for national and local advertising of EXIT. EXIT uses the Fund to pay its employees and subcontractors for the advertising services that it provides. The United States Advertising Fund is administered by EXIT and used for advertising and promotion within the EXIT System. All deposits to and expenditures from the foregoing described funds are within the sole discretion of EXIT. EXIT is not required to spend any amount on advertising or promotion in any particular area or region. The Regional Development Fund is administered by EXIT and used to purchase advertising services within the region in which the Regional Development Fees are generated. The Administrative Fund is administered by EXIT. EXIT distributes the Administrative Fund proceeds to Franchise's Administrators for the sole and exclusive purpose of paying an annual bonus to the support staff employed by the Franchise. Franchisees and Brokers of Record are not eligible to receive the support staff bonus from the Administrative Fund. If an office does not have administrative staff, or if the office does not complete and submit the Administrative Bonus information to EXIT by April 30th each year, the Administrative Fund proceeds allocated for the office will be applied to the United States Charitable Fund. The amount paid to the Franchise Administrators employed by the Franchisee is based upon the discretion of the Franchise and is uniform across the EXIT System. Neither EXIT nor its affiliates shall be considered a trustee or fiduciary with respect to any of the Funds, and no such fiduciary or trust relationship is created hereby.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
Based on the 2025 FDD, the document does not specify with which institution Exit's brokered certificates of deposit are placed. The FDD does mention that from the fees generated from each sale or lease transaction, a portion of the fee is paid to Exit to be deposited in various separate funds administered by Exit or its affiliate. These funds include the United States Charitable Fund, United States Creative Fund, United States Advertising Fund, Regional Development Fund and Administrative Fund. However, the FDD does not elaborate on the specific institutions where these funds are held or if they are in the form of certificates of deposit.
For a prospective franchisee, this lack of information means there is a lack of transparency regarding where Exit holds these funds. It is important to note that none of the funds are audited, which could raise concerns about financial oversight. The FDD states that all deposits to and expenditures from the described funds are within the sole discretion of Exit, meaning Exit has full control over these funds.
Given this, it would be prudent for a potential Exit franchisee to directly inquire with the franchisor about the specific institutions where these funds are held, the nature of the accounts (e.g., if they are indeed certificates of deposit or other types of investments), and the financial controls in place, especially considering the funds are not audited. Understanding these details is crucial for assessing the financial management practices of Exit and the security of the funds collected from franchisees' transactions.