What are the conditions under which Remax Regional may offer financing for acquisitions (Item 10), and how does this relate to the franchisee's obligations regarding growth and expansion 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 offer financing to franchisees for acquisitions or other growth-related expenses at their discretion. The amount financed can cover up to 100% of the associated costs. This financing is formalized through a promissory note, specifically "Promissory Note 4," included as an exhibit in the FDD.
Repayment terms for this financing typically involve equal installments over 36 to 60 months, with interest rates ranging from 5% to 10%. However, Remax may waive the interest if the franchisee meets all growth goals targeted through the repayment period and complies with all terms of the promissory note and franchise agreement. This creates a direct link between the franchisee's growth and expansion performance and the financial terms of the acquisition financing.
Late payments under Promissory Note 4 may result in Remax Regional accelerating the payment and referring it for collection. If this occurs, all outstanding amounts will bear 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. Furthermore, Remax Regional may terminate the Franchise Agreement due to default, although the franchisee remains obligated to pay all unpaid amounts. This underscores the importance of meeting growth targets and maintaining compliance with the franchise agreement to avoid adverse financial and contractual consequences related to the acquisition financing.
While the FDD excerpt details financing for acquisitions and growth, it does not specify how these growth goals are defined in Item 9. A prospective franchisee should ask Remax for details on how growth goals are defined and measured, and how they relate to the franchisee's obligations.