With whom are auditors required to communicate regarding the audit of Remax, and what topics must be covered?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event any such inspection or audit reveals an understatement of any fees, payments or amounts owed to us or REMAX, LLC, you must pay, within 10 days after receipt of the inspection or audit report, all such fees, payments or amounts plus interest at the rate provided in Subsection 6.H. hereof from the date originally due until the date of payment. Further, in the event an inspection or audit is made necessary by your failure to furnish reports, supporting records, or other information, as required by this Agreement, or to furnish reports, records, and information on a timely basis, or if an understatement of any amounts owed to us or REMAX, LLC for any 3 month period is determined by the audit or inspection to be greater than 5%, or if the inspection reveals other conduct that is in any way unlawful or in breach of this Agreement, you must reimburse us for the cost of the audit or inspection, including, without limitation, the charges of any of our representatives (including but not limited to independent accountants) and the travel expenses, room and board, and compensation of our employees. The foregoing remedies are in addition to all other remedies and rights we may have under this Agreement or under applicable law.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
Based on the 2025 Remax Franchise Disclosure Document, if an audit reveals an understatement of fees, payments, or amounts owed to Remax or REMAX, LLC, the franchisee is obligated to pay the understated amount plus interest. This payment must be made within 10 days of receiving the audit report. The interest rate applied will be as provided in Subsection 6.H of the agreement, calculated from the original due date until the payment date.
Furthermore, Remax franchisees may be responsible for covering the expenses of an audit or inspection under specific circumstances. These circumstances include failure to provide required reports, records, or information, providing them late, or if the audit reveals that the understatement of amounts owed to Remax or REMAX, LLC exceeds 5% for any three-month period. Franchisees may also be responsible for audit costs if the inspection uncovers unlawful conduct or a breach of the Franchise Agreement. The costs for which the franchisee would be responsible include charges from representatives of Remax, such as independent accountants, as well as travel expenses, room and board, and compensation for Remax employees involved in the audit.
These financial responsibilities are in addition to any other remedies or rights that Remax may have under the Franchise Agreement or applicable law. This means that Remax has several avenues for recourse if a franchisee fails to meet their financial obligations or violates the terms of the agreement. The obligation to cover audit costs serves as a deterrent against non-compliance and ensures that Remax can recoup expenses incurred while investigating potential breaches of contract or financial discrepancies.