What was the total lease impairment charge taken by Remax during the first quarter of 2022?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
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During the first and third quarters of 2022, the Company subleased portions of its corporate headquarters. As a result, the Company performed impairment tests on the portions subleased. Based on a comparison of undiscounted cash flows to the right of use ("ROU") asset, the Company determined that the asset was impaired, driven largely by the difference between the existing lease rate on the Company's corporate headquarters and the sublease rates received. This resulted in impairment charges of $3.7 million for the first quarter 2022 and $2.5 million for the third quarter 2022, which reflect the excess of the ROU asset carrying value over its fair
Source: Item 1 — Business and Organization (FDD pages 334–464)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, the company incurred a lease impairment charge during the first quarter of 2022. Specifically, Remax subleased portions of its corporate headquarters during the first and third quarters of 2022. As a result of subleasing, Remax performed impairment tests on the subleased portions. These tests compared undiscounted cash flows to the right of use asset.
The results of these tests indicated that the asset was impaired, primarily due to the difference between the existing lease rate on Remax's corporate headquarters and the sublease rates received. This impairment resulted in a charge of $3.7 million for the first quarter of 2022. This charge reflects the excess of the right of use asset carrying value over its fair value.
This type of impairment charge is not uncommon when a company's actual lease costs are higher than the income it receives from subleasing the property. For a prospective Remax franchisee, this information provides insight into how Remax manages its own real estate obligations and how subleasing decisions can impact their financial statements. It is important to note that this situation relates to Remax's corporate headquarters and not directly to franchisee operations.