Under what conditions does Remax review its franchise agreements and other intangible assets for impairment?

According to Remax's 2025 Franchise Disclosure Document, the company reviews its franchise agreements and other intangible assets subject to amortization for impairment when certain conditions are met. Specifically, Remax conducts a review "whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable." This implies that Remax actively monitors its assets and evaluates their value based on ongoing performance and external factors.

To determine if impairment has occurred, Remax compares the carrying amount of an asset group to the estimated undiscounted future cash flows expected to be generated from that asset. If the carrying amount exceeds the expected cash flows, it suggests that the asset's value has diminished. In such cases, Remax then calculates the discounted cash flows to determine the impairment loss. The impairment loss is the difference between the asset's carrying amount and its estimated discounted cash flows, which is then charged to operations.

The 2025 FDD states that for the years ended December 31, 2024, 2023 and 2022, there were no material impairments indicated for such assets. This suggests that, at least in the recent past, Remax's franchise agreements and other intangible assets have maintained their value and performed as expected. However, prospective franchisees should understand that this is not a guarantee of future performance, and the value of these assets could be subject to impairment based on future events or changes in circumstances.

This review process is a standard accounting practice to ensure that a company's assets are accurately valued on its balance sheet. For a potential Remax franchisee, this means that the value of the franchise agreement they are purchasing could be affected by various factors, and Remax has a system in place to assess and account for any potential decline in value.