Under what circumstances will a Remax franchisee be required to reimburse Remax for the cost of an audit or inspection?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event any such inspection or audit reveals an understatement of any fees, payments or amounts owed to us or REMAX, LLC, you must pay, within 10 days after receipt of the inspection or audit report, all such fees, payments or amounts plus interest at the rate provided in Subsection 6.H. hereof from the date originally due until the date of payment. Further, in the event an inspection or audit is made necessary by your failure to furnish reports, supporting records, or other information, as required by this Agreement, or to furnish reports, records, and information on a timely basis, or if an understatement of any amounts owed to us or REMAX, LLC for any 3 month period is determined by the audit or inspection to be greater than 5%, or if the inspection reveals other conduct that is in any way unlawful or in breach of this Agreement, you must reimburse us for the cost of the audit or inspection, including, without limitation, the charges of any of our representatives (including but not limited to independent accountants) and the travel expenses, room and board, and compensation of our employees. The foregoing remedies are in addition to all other remedies and rights we may have under this Agreement or under applicable law.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, a franchisee may have to reimburse Remax for audit costs under specific circumstances. If an audit is triggered because the franchisee failed to provide necessary reports, records, or information on time, Remax can require reimbursement for the audit. This includes charges from representatives like independent accountants, as well as travel expenses, room and board, and compensation for Remax employees involved in the audit.
Another trigger for reimbursement is if the audit reveals that the franchisee understated the amounts owed to Remax or REMAX, LLC, and the understatement for any 3-month period is greater than 5%. In this case, the franchisee is responsible for covering the costs of the audit or inspection.
Finally, if the inspection reveals any unlawful conduct or a breach of the Franchise Agreement, the franchisee will be required to reimburse Remax for the cost of the audit or inspection. These remedies are in addition to any other rights Remax may have under the agreement or applicable law. This means that Remax has several avenues to recoup costs associated with audits if the franchisee is not compliant with reporting and legal obligations.