Why is Remax annual dues revenue considered a usage-based royalty?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
Annual dues are a fixed membership fee paid annually by RE/MAX agents directly to the Company. The Company defers the annual dues revenue when billed and recognizes the revenue ratably over the 12-month period to which it relates. See the "Deferred Revenue" section below for a reconciliation of the activity in the Company's deferred revenue for annual dues. Annual dues revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents.
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to the 2025 Remax Franchise Disclosure Document, annual dues revenue is classified as a usage-based royalty because it directly depends on the number of Remax agents. These annual dues are a fixed membership fee that Remax agents pay directly to the company each year.
The FDD specifies that Remax defers the annual dues revenue when it is billed and then recognizes the revenue gradually over the 12-month period to which it applies. This accounting practice aligns the revenue recognition with the period during which Remax provides services and benefits to its agents.
In essence, the more agents affiliated with Remax, the higher the annual dues revenue. This direct relationship between the number of agents and the revenue generated from annual dues is why Remax considers it a usage-based royalty, similar to how continuing franchise fees and marketing fund fees are also tied to agent count or office numbers.