What are the conditions under which Remax may offer financing for growth-related expenses (Item 10), and how does this relate to the franchisee's obligations regarding expansion and development 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 these costs. The terms of this financing involve payments in equal installments over a period of 36 to 60 months, with an interest rate between 5% and 10%. In some cases, Remax may waive the interest if the franchisee meets specific growth goals by the end of the repayment period and complies with all terms of the promissory note and franchise agreement. This financing is formalized through a promissory note.
If a franchisee is late on a payment under this promissory note, Remax Regional has the right to accelerate the payment and refer it for collection. Should this occur, 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, Remax Regional may terminate the Franchise Agreement due to the default, although the franchisee will still be obligated to pay all unpaid amounts.
This financing option can assist Remax franchisees in expanding their operations, acquiring new businesses, or covering other growth-related costs. However, franchisees need to carefully consider the terms and conditions, including the interest rates, repayment schedules, and potential penalties for late payments or defaults. Meeting growth targets is crucial for those seeking interest waivers, and overall compliance with the franchise agreement is essential to avoid penalties and potential termination.