Where can I find a reconciliation of the activity in the company's deferred revenue for Remax franchise sales?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
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Franchise sales comprises revenue from the sale or renewal of franchises. A fee is charged upon a franchise sale or renewal. Those fees are deemed to be a part of the license of symbolic intellectual property and are recognized as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. See the "Deferred Revenue" section below for a reconciliation of the activity in the Company's deferred revenue for franchise sales.
Other Revenue
Other revenue is primarily from:
- Event-based revenue from education and other programs, which is recognized when the event occurs and until then amounts collected are included in "Deferred revenue".
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, details regarding the reconciliation of activity in the company's deferred revenue for franchise sales can be found in the "Deferred Revenue" section. Remax recognizes franchise fees as revenue over the contractual term of the franchise agreement, which is typically 5 years for RE/MAX and 7 years for Motto franchise agreements. This section provides insights into how Remax accounts for franchise sales revenue over time.
Deferred revenue primarily stems from franchise sales and annual dues. These figures are reflected in the "Deferred revenue" and "Deferred revenue, net of current portion" line items on Remax's Consolidated Balance Sheets. The FDD states that other deferred revenue is primarily related to event-based revenue.
Prospective franchisees should carefully review this section to understand how Remax recognizes revenue from franchise sales and how deferred revenue is accounted for in their financial statements. Understanding these accounting practices can provide valuable insights into the financial health and stability of the Remax franchise system.