For what purpose are the revenues from the Remax Marketing Funds obligated to be used?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
ees*
Marketing Funds fees are fixed contractual fees paid monthly by franchisees based on the number of RE/MAX agents in the respective franchised region or office or the number of Motto offices. These revenues are obligated to be used for marketing campaigns to build brand awareness and to support agent marketing technology. Amounts received into the Marketing Funds are recognized as revenue in the month for which the fee is billed. This revenue is a usage-based royalty as it is dependent on the number of RE/MAX agents or number of Motto offices.
(A Wholly Owned Subsidiary of RMCO, LLC) Notes to Financial Statements December 31, 2024 and 2023
All assets of the Marketing Funds are contractually restricted for the benefit of franchisees, and the Company recognizes an equal and offsetting liability on the Company's balance sheet for all amounts received. Additionally, this results in recording an equal and offsetting amount of expenses, against all revenues such that there is no impact to overall profitability of the Company from these revenues.
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to the 2025 Remax Franchise Disclosure Document, the revenues from the Marketing Funds are specifically designated for marketing campaigns aimed at enhancing brand awareness and supporting agent marketing technology. These funds are collected monthly from franchisees, with the amount determined by the number of RE/MAX agents in their region or office, or the number of Motto offices. The revenues are recognized in the month the fee is billed and are considered a usage-based royalty due to their dependence on agent or office numbers.
All assets within the Marketing Funds are contractually restricted for the benefit of Remax franchisees. This restriction is reflected in the company's accounting practices, where an equal and offsetting liability is recorded on the balance sheet for all amounts received. This accounting treatment ensures that the revenues have no impact on the overall profitability of the company, as an equal and offsetting amount of expenses is also recorded. Additionally, advertising costs are expensed as they are incurred.
In practice, this means that Remax franchisees can expect their marketing fees to be directly reinvested into activities that support the brand and provide them with marketing tools. The contractual restriction on these funds provides a level of assurance that the money will be used for its intended purpose. The services provided to the Marketing Funds include building and maintaining agent marketing technology, dedicated employees focused on marketing campaigns, and various administrative services including customer support of technology, accounting and legal.