For Remax, who is responsible for U.S. federal and state income taxes on net domestic taxable 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 the 2025 Remax Franchise Disclosure Document, because Remax, LLC operates as a "flow through" entity for tax purposes, the responsibility for the majority of taxes on the company's earnings falls on its member, RMCO, LLC. Therefore, Remax itself does not have a provision for U.S. income taxes on these earnings. However, Remax does have certain subsidiaries and foreign income that are taxable, which constitutes the entirety of the company's tax provision.
This means that the profits and losses of Remax, LLC are passed directly to its member, RMCO, LLC, which then reports these on its own tax returns. This structure avoids double taxation, where the company's profits are taxed at the corporate level and then again when distributed to the owners. For a Remax franchisee, this information is relevant in understanding the financial structure of the franchisor and how its tax obligations are handled.
The FDD specifies that income taxes incurred on earnings subject to tax are recorded in the "Provision for income taxes" section of the Consolidated Statements of Income (Loss). The difference between U.S. and foreign tax rates would account for any variations from U.S. statutory rates for income subject to tax. This indicates that Remax has income from both domestic and international sources, with the international income being subject to the tax laws of those foreign jurisdictions.