What are the conditions under which Remax may offer financing for acquisitions or other growth-related expenses (Item 10), and how does this relate to the franchisee's obligations regarding reporting and financial transparency as outlined in Item 9?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
In our discretion, we may also provide you with financing to assist you with acquisition or other growth-related expenses. While the amount of financing we offer will depend on the scope of your anticipated acquisition or growth-related expenses, we anticipate that up to 100% of the associated costs
may be covered by such financing. A copy of the current form of promissory note for acquisition or other growth-related expenses ("Promissory Note 4") is attached as Exhibit B-4.
If you wish to finance acquisition or other growth-related expenses, payments will be due in equal installments for a specific term, typically 36 to 60 months, at an interest rate between 5 and 10%. In some instances, interest may be waived provided you meet all growth goals that may be targeted through the end of the repayment period and you comply with all other terms and conditions of the promissory note and your franchise agreement.
If a payment due under Promissory Notes 1, 2 or 3 is late, RE/MAX Regional may accept the late payment with a 10% late charge or, upon 10 days' written notice, accelerate payment of the outstanding principal and interest. All payments will be applied first to outstanding late charges and then to principal. (Promissory Notes 1, 2 and 3 – Sections 3, 4 and 5.) If a payment due under Promissory Note 4 is late, RE/MAX Regional may accelerate payment and refer it for collection, as described below.
If RE/MAX Regional accelerates payment and subsequently refers any of the promissory notes to an attorney for collection, all outstanding amounts will bear interest at the default rate of 20% per year (or if this rate exceeds the highest rate permitted under applicable law, then at the highest rate legally permitted) and you will have to pay RE/MAX Regional's reasonable attorneys' fees and costs it incurs as a result of the default. As an additional remedy if you default, RE/MAX Regional may terminate your Franchise Agreement (although this will not release you from having to pay all unpaid amounts). (Promissory Notes 1 and 2 - Sections 5 and 6; Promissory Note 3 - Sections 4 and 6.)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, Remax Regional may, at its discretion, offer financing to franchisees for acquisition or other growth-related expenses. The amount of financing can cover up to 100% of the associated costs. The terms of this financing typically involve equal installment payments over 36 to 60 months, with interest rates ranging from 5% to 10%. In some cases, Remax may waive interest if the franchisee meets specific growth goals and complies with all terms of the promissory note and franchise agreement.
If a franchisee is late on a payment under Promissory Note 4 (specifically for acquisition or growth-related expenses), Remax Regional may accelerate the payment and refer it for collection. Should Remax Regional need to involve an attorney for collection, all outstanding amounts will accrue interest at a default rate of 20% per year (or the highest legally permitted rate), and the franchisee will be responsible for Remax Regional's attorney's fees and costs. Additionally, default may lead to the termination of the Franchise Agreement, although the franchisee remains obligated to pay all unpaid amounts.
While the excerpts provided do not explicitly detail how this financing directly relates to Item 9 (which typically covers franchisee obligations regarding reporting and financial transparency), there are some connections. Item 22 discusses financial reporting requirements for renewals and transfers. To renew their franchise agreement, Remax franchisees must provide current financial statements, including balance sheets and results of operations, reflecting gross sales and revenues, and any other financial reports or information Remax requires. Similarly, when transferring a franchise, franchisees must submit current, accurate financial statements and other documents of the proposed transferee(s) or assignee(s). These requirements ensure Remax can assess the financial health and capabilities of both the existing franchisee and any potential new owners.
Prospective franchisees should inquire with Remax about the specific reporting requirements tied to growth-related financing to fully understand their obligations. They should also seek clarity on how Remax assesses growth goals for potential interest waivers and what specific financial information must be provided regularly to maintain good standing and avoid default.