What are the estimated costs for insurance for a Remax franchise in Item 7, and how do these costs relate to the franchisee's obligations regarding insurance coverage as outlined in Item 9?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
9 You must obtain and maintain certain types and amounts of insurance (see Item 8). Insurance costs may depend on such factors as: policy limits, types of policies, nature and value of physical assets, gross revenue, number of Sales Associates, square footage, geographic location of the office, business contents, your coverage history, and other factors bearing on risk exposure. Your actual cost may be higher or lower than this range and may depend on such things as the location of your Office (insurance premiums may vary by state), your claim history, or if you purchase more than the minimum coverage required under the Franchise Agreement. Cyber insurance costs also vary depending on the information technology controls that you have implemented, whether you encrypt data and whether you have implemented multi-factor authentication.
What This Means (2025 FDD)
Based on the 2025 Remax Franchise Disclosure Document, Item 7 does not provide specific estimated costs for insurance. However, it does state that insurance costs may depend on factors such as policy limits, types of policies, the nature and value of physical assets, gross revenue, the number of sales associates, square footage, geographic location, business contents, and coverage history. The document indicates that cyber insurance costs also depend on the information technology controls implemented, such as data encryption and multi-factor authentication.
Item 8 and Item 22 outline the franchisee's obligations regarding insurance coverage. Remax requires franchisees to obtain and maintain specific insurance coverage, including workers' compensation insurance, cyber/network security and privacy liability insurance (with a minimum of $1,000,000 combined single limit, or no less than $500,000 if $1,000,000 is unobtainable due to office size), and any insurance required by lease terms or lenders. Remax also recommends media liability insurance and employment practices liability insurance.
Remax requires that all insurance policies name RE/MAX Holdings, Inc., REMAX, LLC, and RE/MAX Regional as additional insureds and provide primary and noncontributory coverage. The policies must also include a waiver of subrogation rights against these entities and provide 30 days' written notice of any policy changes. Remax reserves the right to designate the insurance agency or broker that franchisees must use. Failure to maintain the required insurance constitutes a material breach of the Franchise Agreement and may result in termination.
Prospective Remax franchisees should note that Remax may change the minimum amount of coverage required or require different or additional kinds of insurance. Franchisees must provide certificates of insurance at least 30 days before the effective date of the policy and annually thereafter. Additionally, franchisees are often required to purchase an extended reporting period endorsement (tails coverage) for errors and omissions insurance, covering a period of 3 years after the termination or transfer of the Franchise Agreement.