What was the total contract cost for new activity related to capitalized commissions for 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 total contract cost for new activity related to capitalized commissions in 2024 was $1,753,000. This figure represents the investment Remax made in acquiring new franchise agreements during the year. These costs are capitalized, meaning they are recorded as an asset on the balance sheet rather than expensed immediately.
Capitalizing these costs allows Remax to spread the expense over the life of the franchise agreement, which reflects the period over which Remax expects to benefit from the franchise sales. The capitalized contract costs for commissions 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 recognized $2,425,000 as an expense. By the end of 2024, the balance of capitalized contract costs for commissions was $3,553,000. This accounting treatment provides a more accurate picture of Remax's financial performance by matching the costs of acquiring franchises with the revenue they generate over time.