What laws govern the requirement for an Exit franchisee to be a licensed real estate broker?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
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Every Franchise must possess a bonafide real estate broker's license in good standing under the laws of the state where the Franchise is located. Franchisees are expected to provide first class real estate service to the buying and selling public. The Franchisee has the responsibility to hire and recruit real estate sales representatives and to compete in the real estate brokerage business. The number of sales representatives required under a Franchise Agreement is based on the active Realtor® population in the geographic territory that includes your Protected Territory (see ITEM 12 of this Disclosure Document) and based upon market conditions and competition.
EXIT's agents for service of process are disclosed in Exhibit B of this Disclosure Document.
Your activities are subject to state and federal laws and regulations, including, but not limited to, those related to real estate transfer, real estate settlement procedures and real estate brokerage laws.
If the Franchisee is operating as a corporation, partnership or limited liability company, you must comply with the requirements of entity ownership set forth in Section 14 of the Franchise Agreement. Those requirements include:
- (a) You must execute a Personal Guaranty of the Franchise Agreement.
- (b) The Franchisee entity must be legally authorized to do business in the state where your Protected Territory is located.
- (c) You must provide EXIT Realty Upper Midwest with copies of the Franchise entity's organizational documents, such as Articles of Incorporation and Bylaws, Articles of Organization and Operating Agreement or Partnership Agreement, including a breakdown of ownership.
- (d) You must provide EXIT Realty Upper Midwest with a copy of any Buy-Sell Agreement between the equity holders of the Franchisee entity.
No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
ITEM 2 BUSINESS EXPERIENCE
Subfranchisor
EXIT Realty Upper Midwest
Upper Midwest Realty, Inc Director and President
Bill Pankonin has over 40 years' experience in real estate, operating his family run independent brokerage called Pankonin Realty, in Lakeville, MN which included offering auction and appraisal services. From 2000 to 2004, he was the President of Real Estate Funding Group, a commercial and residential loan brokerage in Lakeville, MN.
Source: Item 16 — RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL (FDD page 27)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, every Exit franchisee must possess a bonafide real estate broker's license in good standing under the laws of the state where the franchise is located. This requirement is further emphasized, stating that the franchisee must at all times hold a valid real estate broker's license and comply with the codes of the local regulatory body that serves its protected territory. Additionally, the franchisee must comply with all local, state, and federal laws, ordinances, rules, and regulations relating to the franchisee's business. This encompasses real estate transfer, settlement procedures, and brokerage laws.
This means that a prospective Exit franchisee must meet all licensing requirements for real estate brokers in the state where they plan to operate their franchise. This includes maintaining good standing with the local regulatory body. If the franchisee operates as a corporation, partnership, or limited liability company, the entity must also possess a valid real estate broker's license in the state where the protected territory is located.
Exit Realty Upper Midwest recommends that potential franchisees retain an attorney to advise them on laws and regulations specific to the state where their sales territory is located. This is to ensure full compliance with all applicable laws and regulations. Subfranchisor shall limit the offering of Exit Realty Corp. franchises to persons or entities who possess a valid real estate broker's license.