How does Remax apply payments received if a franchisee has past due indebtedness?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
When we or REMAX, LLC receive a payment or a partial payment required under this Section 6, we or REMAX, LLC have the right to apply it as we see fit to any past due indebtedness of yours, including late charges or interest due, all without regard to how you designate or direct that a particular payment be applied. If we are ever deemed to have contracted for, charged or received late payments or interest on any overdue sums in an amount that exceeds the amount permitted under applicable law, then such excess amount shall be deemed intended for, and will be applied as, payment of outstanding fees or other amounts due under this Agreement and, if no such amounts remain outstanding, such excess shall be returned to you.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, Remax or REMAX, LLC has the right to apply payments received from a franchisee toward any past due indebtedness, including late charges or interest. This application of payment can be done without regard to any specific designation or direction from the franchisee on how the payment should be applied.
This means that if a Remax franchisee has outstanding balances, late fees, or interest charges, any payment made can be allocated by Remax to those outstanding debts first. The franchisee cannot dictate that the payment be applied to current fees or any other specific obligation if there are past due amounts. This policy is designed to protect Remax's financial interests by ensuring that overdue debts are addressed promptly.
However, the FDD also states that if Remax is ever deemed to have charged or received excessive late payments or interest that exceed the amount permitted by law, the excess amount will be applied to outstanding fees or other amounts due under the Franchise Agreement. If no such amounts remain outstanding, the excess will be returned to the franchisee. This clause ensures compliance with applicable laws regarding late fees and interest charges.
This policy is fairly standard in franchising, as franchisors typically want to ensure that franchisees remain current on all obligations. Franchisees should be aware of this provision and ensure timely payments to avoid incurring late charges and losing control over how their payments are applied.