Under what conditions can Remax make unlimited restricted payments, such as dividends and share repurchases, according to the Senior Secured Credit Facility?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
redit Facility.
The Senior Secured Credit Facility provides for customary restrictions on, among other things, additional indebtedness, liens, dispositions of property, dividends, transactions with affiliates and fundamental changes such as mergers, consolidations, and liquidations. These restricted payments include declaration or payment of dividends, repurchase of shares, or other distributions. In general, the Company can make unlimited restricted payments – primarily dividends and share repurchases – if the Company's TLR is below 3.50:1 (both before and after giving effect to such payments). If the Company's TLR exceeds 3.50:1, the Company will generally be limited in the amount of restricted payments it can make up to the greater of $50 million or 50% of consolidated EBITDA on a trailing twelve-month basis (unless the Company can rely on other restricted payment baskets available under the Senior Secured Credit Facility).
The Company's TLR is calculated quarterly and is based on RE/MAX, LLC's consolidated indebtedness and consolidated EBITDA on a trailing twelve-month basis, both defined in the Senior Secured Credit Facility. For the twelve-month period ending December 31, 2024, RE/MAX, LLC's consolidated EBITDA, as defined in the Senior Secured Credit Facility, was $97.4 million and as of December 31, 2024, the Company's
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's Senior Secured Credit Facility places restrictions on additional debt, liens, property dispositions, dividends, affiliate transactions, and fundamental changes like mergers and liquidations. These restrictions apply to payments such as dividends, share repurchases, and other distributions.
Remax can make unlimited restricted payments, including dividends and share repurchases, if its Total Leverage Ratio (TLR) is below 3.50:1, both before and after the payments. However, if the company's TLR exceeds 3.50:1, the amount of restricted payments is generally limited to the greater of $50 million or 50% of the consolidated EBITDA on a trailing twelve-month basis. There may be other restricted payment options available under the Senior Secured Credit Facility that Remax could utilize.
As of December 31, 2024, Remax, LLC's consolidated EBITDA was $97.4 million, and the company's TLR was 3.57:1. This means that as of that date, Remax would have been limited in the amount of restricted payments it could make, based on the TLR exceeding the 3.50:1 threshold. The TLR is calculated quarterly, based on RE/MAX, LLC's consolidated indebtedness and consolidated EBITDA on a trailing twelve-month basis, as defined in the Senior Secured Credit Facility.