What do Exit's notes receivable represent?

According to Exit's 2025 Franchise Disclosure Document, the notes receivable represent balances due on the sale of Canadian and U.S. regions from sub-franchisors. Exit grants development rights to sub-franchisors within specific geographic regions, who then locate and secure franchisees to open and operate Exit Realty offices.

These notes receivable bear interest at rates between 3.00% and 10.00% and mature between 2024 and 2033. The notes are secured by performance contracts in the franchisor agreements.

For a prospective Exit franchisee, this indicates that Exit generates revenue not only from franchisees but also from sub-franchisors who purchase development rights. The interest rates and maturity dates on these notes provide insight into the financial arrangements Exit has with its sub-franchisors. The fact that these notes are secured by performance contracts suggests that Exit has taken steps to mitigate the risk of non-payment, linking repayment to the sub-franchisors' performance in developing their territories.