What was the balance of capitalized contract costs for commissions at Remax as of January 1, 2024?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
s):
| Balance at | contract cost | Expense | Balance at | |
|---|---|---|---|---|
| January 1, 2024 | for new activity | recognized | December 31, 2024 | |
| Capitalized contract costs for commissions | $ 4,225 | $ 1,753 | $ (2,425) | $ 3,5 |
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the balance of capitalized contract costs for commissions as of January 1, 2024, was $4,225 (in thousands). This figure represents the initial investment Remax has made in commissions that are then expensed over the life of the franchise agreement.
Capitalized contract costs for commissions are treated as assets on Remax's balance sheet and amortized over the contract life. For a prospective franchisee, this indicates that Remax invests significantly in commissions related to new franchise activities. The FDD also shows that during 2024, Remax had new activity contract costs of $1,753 (in thousands) and recognized expenses of $2,425 (in thousands), resulting in a balance of $3,553 (in thousands) as of December 31, 2024.
Understanding these capitalized costs and how they are amortized can provide insight into Remax's financial strategies and how they manage commission expenses related to franchise sales. Franchisees may want to inquire about the specific amortization schedule and how it impacts the overall financial performance of Remax.