How does Remax recognize advertising revenue generated through advertisements, media and sponsorship sales via its websites?

According to Remax's 2025 Franchise Disclosure Document, advertising revenue generated through advertisements, media, and sponsorship sales via their websites is recognized as ads are delivered. This revenue recognition is based on the number of clicks or impressions an advertisement receives. Remax records this revenue net of any commissions paid to advertising agencies, if applicable. The reason for recording the revenue net of commissions is that Remax does not control the good or service provided in these advertising arrangements.

For a prospective Remax franchisee, this accounting practice means that the revenue reported from online advertising will reflect the actual value received by Remax after deducting any payments made to advertising agencies. This provides a clearer picture of the net income Remax earns from its online advertising efforts. It also indicates that Remax outsources some of its advertising sales functions to agencies, and the commissions paid to these agencies are directly offset against the advertising revenue.

This approach is consistent with standard accounting practices, where revenue is recognized when it is earned and realized or realizable. In the case of online advertising, the delivery of ads (measured by clicks or impressions) is the event that triggers revenue recognition. The fact that Remax records the revenue net of commissions suggests that it acts as an agent in these transactions rather than the principal, which is a common arrangement in the advertising industry.