As a 'flow through' entity, who is responsible for the majority of taxes on Remax's earnings?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
As a "flow through" entity for tax purposes, the Company's member is responsible for the substantial majority of taxes on the Company's earnings, accordingly, no provision for U.S. income taxes on those earnings has been made. The Company has certain subsidiaries and foreign income that are taxable, which represent the entirety of the Company's tax provision. For the income subject to tax, the difference to U.S. statutory rates would be attributable to the difference between U.S. and foreign tax rates. Income taxes incurred on those earnings are recorded in the "Provision for income taxes" in the accompanying Consolidated Statements of Income (Loss) and consist of the following (in thousands):
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, because Remax is considered a 'flow through' entity for tax purposes, the company's member is responsible for the substantial majority of taxes on the company's earnings. As such, the document states that no provision for U.S. income taxes on those earnings has been made at the company level. This means that the profits and losses of Remax are passed directly to its member, and the member is then responsible for reporting these on their individual tax returns.
However, the FDD notes that Remax does have certain subsidiaries and foreign income that are taxable, which represent the entirety of the company's tax provision. Income taxes incurred on those earnings are recorded in the "Provision for income taxes" in the accompanying Consolidated Statements of Income (Loss). The difference to U.S. statutory rates would be attributable to the difference between U.S. and foreign tax rates.
For a prospective Remax franchisee, this information is relevant on the corporate level, not at the franchisee level. The franchisee will need to understand how their own business structure affects their tax obligations. It is important to consult with a professional tax advisor to understand the full implications of Remax's tax structure and how it might indirectly affect franchisees.