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Earnings Claims of Top Franchises Revealed

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Franchise Costs: Detailed Estimates of RE/MAX Franchise Costs (2016 FDD)

by Franchise Chatter on October 22, 2016

in Brokerage Franchise, Franchise Costs, Real Estate Franchise

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Detailed Estimates of RE/MAX Franchise Costs Based on Item 7 (Estimated Initial Investment) of RE/MAX’s 2016 Franchise Disclosure Document

1.  Initial Franchise Fee:  $10,000 to $25,000

2.  Office Set-Up:  $3,500 to $70,000

  • Your Office must have a minimum of 1,000 square feet to start; have an acceptable floor plan and appearance; be equipped with furniture, telephones, and other miscellaneous office equipment necessary to conduct a real estate brokerage business; and be staffed by at least one full-time secretary.
  • The exact size of your Office will depend on the number of Sales Associates you anticipate having under contract and the availability of office space in your area.
  • If you are converting an existing real estate office rather than starting a new office, your initial investment for Office Set-Up/Improvements may be closer to the low end of the range.
  • If you are starting a new office that is 1,000 square feet in size, these costs should typically be in the $20,000 to $70,000 range.
  • The actual cost of the office space and improvements, however, will depend on whether you lease or purchase the space; the size, condition, and location of the Office; the demand for the office space among prospective lessees; the type of tenant finish or improvements you choose; and how you prefer to furnish and decorate the Office.

3.  Exterior Office Signage:  $500 to $10,000

4.  Furniture, Fixtures, and Equipment:  $5,000 to $40,000

  • In addition to furniture, telephones, and other miscellaneous office equipment necessary to conduct a real estate brokerage business, you must maintain at the Office a fax machine, a photocopier, a printer, high speed internet and e-mail access, and a computer system with hardware and software that is compatible with all of RE/MAX, LLC’s and RE/MAX Regional’s communication and data reporting requirements.
  • Costs for computer hardware, networking, software, and other office equipment such as fax machines can vary significantly, depending on the quality you choose and the automation requirements of your Office.
  • The costs you incur may vary significantly and will depend, in large part, on whether you are converting an existing real estate office which already has much of the furniture, fixtures, and equipment you will need or you are starting a new office; whether you lease or finance your furniture, fixtures, and equipment or purchase them outright; and the size of your office.
  • If you are starting a new office and purchase your furniture, fixtures, and equipment outright, or if your office is larger than 1,000 square feet, your initial outlay may be considerably higher than the upper range listed in the table.

5.  Inventory and Supplies:  $500 to $4,000

  • This category covers various supplies you will need prior to opening the real estate brokerage business, including such items as business cards, “for sale” signs, stationery, and postage.

6.  Training Fees and Expenses:  $1,500 to $4,000

  • You or your principal owner responsible for the Office and your Manager, if any, must attend and complete the mandatory 4 1/2-day RE/MAX office training program.
  • You may send one or more people from the Office free of charge to the training program, although you will be responsible for all travel, meal, lodging, and entertainment expenses you or anyone else from the Office incurs while attending the training program in the Denver, Colorado metropolitan area.

7.  Miscellaneous Opening Costs:  $2,000 to $15,000

  • This category covers miscellaneous opening costs and expenses, such as broker and other required licenses; security deposit and first month’s rent; advertising (including, but not limited to, a grand opening promotion,); legal and accounting expenses; insurance; membership in national, state, and local REALTOR® associations; deposits for gas, electricity, and related utilities; installation of telephone and computer systems; and preparation of the required business plan (“Business Plan”).
  • As with other categories, the costs you incur will depend largely on whether you are converting an existing office (where your costs can generally be expected to be closer to the low end of the range) or starting a new office where your costs will generally be closer to the high end of the range.

8.  Additional Funds – 3 Months:  $15,000 to $50,000

  • This category estimates your initial start-up expenses (other than the items identified separately in the table) prior to opening your Office and/or during the 3-month period after the Office begins operations.
  • These expenses include payroll costs, rent or mortgage payments, Internet service provider fees (necessary for high speed Internet and email access), and other overhead expenses. These figures are estimates, and RE/MAX Regional cannot guarantee that you will not have additional expenses starting the business.
  • In general, these costs should be closer to the low end of the range if you are converting an existing office, and between $30,000 and $50,000 if you are starting a new office.
  • RE/MAX Regional and RE/MAX, LLC relied on the real estate experience of some of its and RE/MAX, LLC’s top executive officers and on financial information obtained from RE/MAX offices within typical regions to compile these estimates. However, the range of total expenditures you incur may vary considerably from the amounts estimated above.
  • RE/MAX Regional does not offer financing directly or indirectly for any part of the initial investment.
  • The monetary figures reflected in this category do not include any amounts you may need for personal or living expenses and do not include any costs which you might incur if you are acquiring an existing real estate business or its assets.

9.  Total Initial Investment:  $38,000 to $218,000

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