Under what conditions can Remax require financial reports, financial statements, and related information from the franchisee, the franchise, the owners personally, and any other businesses owned by the owners?
Remax Franchise · 2025 FDDAnswer from 2025 FDD Document
Within 60 days after the close of your fiscal year for federal income tax purposes, a financial statement containing a balance sheet and results of operations, including gross sales and revenues for such year; and
(3) Other Financial Reports.
Such other financial reports as we may prescribe from time to time. All financial reports, financial statements and related information shall be on forms prescribed or approved by us and shall be verified and signed by you and your chief financial officer (or other individual of comparable position). If you are in default of any provision of this Agreement, we reserve the right to require you to provide financial reports, financial statements, and related information not only for Franchisee and the Franchise, but also for the Owners, personally, and for any other businesses owned in whole or in part by some or all of the Owners. If you are operating an ancillary business without our permission, we will have the right to audit or review the financial records of that business upon request.
Source: Item 22 — Contracts (FDD pages 108–334)
What This Means (2025 FDD)
According to Remax's 2025 Franchise Disclosure Document, Remax can request financial reports under specific circumstances. Generally, franchisees must submit a financial statement containing a balance sheet and results of operations, including gross sales and revenues, within 60 days after the close of their fiscal year for federal income tax purposes. These reports must be on forms prescribed or approved by Remax and verified and signed by the franchisee and their chief financial officer.
However, if a franchisee is in default of any provision of the Franchise Agreement, Remax reserves the right to require financial reports, financial statements, and related information not only for the franchisee and the franchise but also for the owners personally and for any other businesses owned in whole or in part by some or all of the owners. Additionally, if a franchisee operates an ancillary business without Remax's permission, Remax has the right to audit or review the financial records of that business upon request.
This provision allows Remax to closely monitor the financial health and compliance of its franchisees, especially when there is a concern about potential breaches of the agreement or unauthorized business activities. For a prospective franchisee, this means maintaining diligent financial records and adhering to the terms of the franchise agreement is crucial to avoid increased scrutiny and potential audits. It also highlights the importance of obtaining permission before engaging in any ancillary business ventures.