Is Exit responsible for securing financing for franchisees?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company's operations have been funded through capital contributions from the stockholders, financing by EXIT Realty Corp. International, and cash flows from operations. The Company is growing and, as such, is incurring expenditures in the near term to benefit the future as it looks to grow the franchisee base and expand into new markets. Such expenses could be reduced or eliminated to improve operating cash flows as needed in the future.
During the year ended December 31, 2023, management took several actions in an attempt to improve operating cash flows including the restructuring of notes payable owed to Exit Realty Corp. International, as disclosed in Note 3 – Notes Payable, and the negotiation of increased territory management with Exit Realty Corp. International as disclosed in Note 1 – Significant Accounting Policies: Intangible Assets. As of the date these financial statements were available to be issued, the Company continues to sell franchises, and is generating franchise commissions revenues from open and operating franchisees. The Company believes that the combination of the actions taken, along with the decrease in interest rates that are projected to induce housing market stimulation, will enable the Company to meet its funding requirements for one year from the date these financial statements were available to be issued. If necessary, stockholders of the Company intend to provide any financial assistance needed by the Company should its cash flows from operations combined with its cash balances not be sufficient to meet its working capital needs. Management believes that the stockholders have the intent and ability to provide the funds needed, if any, to continue to fund the operations of the Company for at least one year from the date these financial statements were available to be issued.
Source: Item 10 — FINANCING (FDD page 19)
What This Means (2025 FDD)
Based on the 2025 FDD, there is no indication that Exit is responsible for securing financing for franchisees. The document outlines the franchise opportunity, the EXIT System, and the franchisee's responsibilities, but it does not mention Exit providing or securing financing for franchisees.
The FDD details the funding of the company's operations through capital contributions from stockholders, financing by EXIT Realty Corp. International, and cash flows from operations. It also mentions actions taken to improve operating cash flows, such as restructuring notes payable and negotiating increased territory management with Exit Realty Corp. International. These actions are aimed at ensuring the company can meet its own funding requirements and support its growth.
While the FDD does not explicitly state that Exit does not offer financing, the absence of any mention of such services suggests that franchisees are responsible for securing their own financing. Prospective franchisees should directly inquire with Exit about available financing options or assistance during their due diligence process to confirm whether any support is available.