How are Transaction Fees calculated by Exit for commissions paid in installments on properties?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
b) Partial Commissions
All Transaction Fees for Commissions on 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 6.a). For example, each installment of Commission will be entered into EXIT's computer reporting system separately and the Transaction Fee will be calculated using the same formula that is used for all transactions.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, transaction fees for commissions paid in installments are calculated in the same manner as regular transaction fees. Each installment of commission is entered separately into Exit's computer reporting system, and the transaction fee is calculated using the same formula applied to all transactions. This applies whether the installments are paid before or after the closing date of the property transaction.
To illustrate, Exit assesses transaction fees based on the gross commission generated. For instance, a transaction side generating a gross commission between $250.01 and $2,500 incurs a $50 fee, while a commission between $2,500.01 and $5,000 results in a $150 fee. Higher commission brackets are subject to higher fees, up to $400 for commissions exceeding $25,000. When commissions are paid in installments, each installment is treated as a separate transaction for fee calculation purposes, ensuring that Exit receives its transaction fees even if the full commission is not paid upfront.
This approach means that franchisees need to be aware of how each commission installment affects the transaction fee calculation. For example, if a property sale results in a $6,000 commission paid in two installments of $3,000 each, Exit will charge two separate transaction fees based on the $2,500.01 to $5,000 bracket, which is $150 per installment, totaling $300. This is different from a single payment of $6,000, which would incur a $225 transaction fee. Franchisees should factor these calculations into their financial planning and commission management.
Furthermore, the maximum transaction fees paid per calendar year per sales representative is capped at $2,700. This limit applies to all transaction fees, including those from installment payments. Franchisees should monitor their transaction fees throughout the year to ensure they do not exceed this limit. Understanding these fee structures and calculation methods is crucial for managing costs and maximizing profitability within the Exit franchise system.