How does Remax define a Level 2 fair value measurement?

According to Remax's 2025 Franchise Disclosure Document, Level 2 fair value measurements involve specific criteria related to quoted prices and valuation models. Level 2 includes quoted prices for similar instruments in active markets. It also encompasses quoted prices for identical or similar instruments in markets that are not active. Furthermore, it includes model-derived valuations where all significant inputs are observable in active markets.

For a Remax franchisee, understanding these definitions is crucial for interpreting the company's financial statements. The FDD states that the fair value of Remax's debt reflects a Level 2 measurement, estimated based on quoted prices for the company's debt instruments in an inactive market. This indicates how Remax values its financial instruments and manages its debt.

It's important to note that fair value measurements are market-based and determined by assumptions market participants would use in pricing an asset or liability. Remax follows a three-tier hierarchy for fair value measurements, prioritizing inputs used in measuring fair value. This hierarchy helps ensure transparency and consistency in financial reporting.