How much in expenses related to capitalized contract costs for commissions were recognized by Remax in 2024?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
s):
| Balance at | contract cost | Expense | Balance at | |
|---|---|---|---|---|
| January 1, 2024 | for new activity | recognized | December 31, 2024 | |
| Capitalized contract costs for commissions | $ 4,225 | $ 1,753 | $ (2,425) | $ 3,5 |
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the expenses recognized related to capitalized contract costs for commissions totaled $2,425,000 for the year ending December 31, 2024. These costs are associated with commissions paid on franchise sales, which Remax recognizes as an asset and amortizes over the life of the franchise agreement. These costs are included in "Other current assets" and "Other assets, net of current portion" on the Consolidated Balance Sheets.
At the beginning of 2024, the balance of capitalized contract costs for commissions was $4,225,000. During the year, Remax added $1,753,000 in new activity related to these costs. After recognizing the expense of $2,425,000, the balance at the end of December 31, 2024, was $3,553,000.
For a prospective Remax franchisee, understanding how these capitalized costs are treated is important for assessing the company's financial health and how it manages its assets. The amortization of these costs over the contract life reflects a standard accounting practice of spreading the expense over the period it benefits the company. This provides a more accurate picture of Remax's profitability and financial performance over time.