Detailed Information on Realty ONE Group’s Initial Franchise Fee, Royalty Fee + 19 Other Fees (Items 5 and 6, 2021 FDD)
1. Initial Franchise Fee: $15,000 to $22,000
- The Initial Franchise Fee is $22,000.
- However, if your “Primary Marketing Area” (as defined in the Franchise Agreement) contains 650 or fewer real estate agents, has a population of 50,000 or less, and is not adjacent to a metropolitan area consisting of a densely populated urban core and less populated surrounding territories, it would be defined in the Franchise Agreement as a “Low Density Marketing Area” and the Initial Franchise Fee you pay would be $15,000.
- The Initial Franchise Fee is due and payable in full when you sign the Franchise Agreement. The Initial Franchise Fee is fully earned by Realty ONE Group when paid and is not refundable.
- If before your successful completion of initial training, Realty ONE Group decides, in its sole discretion, that you should not operate a Realty ONE Group business, it may cancel the Franchise Agreement, without any liability to it.
2. MLS Set-up Fee: $1,000 to $2,500 per applicable MLS
- In addition to the Initial Franchise Fee, to reimburse Realty ONE Group for its payments to its approved vendor to integrate appropriate data feeds regarding your Outlet in the Multiple Listing Services (“MLS”) applicable to the area in which your Outlet is located, you must pay Realty ONE Group before the Opening Date an “MLS Set-up Fee” ranging from $1,000 to $2,500 per each applicable MLS.
- The MLS Set-Up Fee varies by market and is not refundable.
3. Royalty: none
- Due Date: Not applicable.
- No percentage royalty is payable to Realty ONE Group under the Franchise Agreement.
4. Monthly Agent Fee: either (i) the product of (a) $503 multiplied by (b) the number of Real Estate Agents at your Outlet operating under or associated with your real estate broker’s license, or (ii) $1,225 (or $600 if you are in a Low Density Marketing Area), whichever is greater
- Due Date: On the 7th calendar day of the following month.
- The Monthly Fee is based on the number of your Real Estate Agents at your Outlet as of the last business day of the month before your Monthly Fee is due and as reported to Realty ONE Group.
- Within 7 days after the Opening Date, all your Real Estate Agents must be enrolled in Realty ONE Group’s proprietary zONE (enrollment and tracking) system.
5. Transaction Fee: $125 for the first $200,000 and $50 for each additional $200,000 of the price of residential properties and $125 for the first $100,000 and $50 for each additional $100,000 of the price of commercial properties
- Due Date: On the 7th calendar day of the following month.
- The Transaction Fee is only payable if the sale or lease of the property results in a gross commission income of $2,000 or more.
- You must also send Realty ONE Group a transaction report in the form it prescribes.
6. Marketing and Promotion Fees: 2% of Monthly Agent Fees and Transaction Fees
- Due Date: On the 7th calendar day of the following month.
- Marketing and Promotion Fees are paid monthly, beginning with the first full calendar month after the Opening Date.
7. Satellite Office Fee: $5,000
- Due Date: When you sign an Addendum for Satellite Office.
- If in Realty ONE Group’s sole discretion you are financially and operationally qualified to do so, it may allow you to open a satellite office to be operated under the Franchise Agreement for your Outlet. You would pay the Satellite Office Fee and sign the Addendum for Satellite Office.
8. Renewal Fee: $5,000, plus $1,000 for each Satellite Office under your Franchise Agreement
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- Due Date: When you sign your renewal Franchise Agreement.
- Payable only if you exercise renewal option.
- You are qualified for renewal if you are in full compliance of your operating requirements, all fees due Realty ONE Group are paid and you are not in breach of any term of your Franchise Agreement, and you sign Realty ONE Group’s new form of Franchise Agreement (which will replace your expiring Franchise Agreement) and a new Addendum for Satellite Office.
9. Transfer Fee: $2,500
- Due Date: Not later than 10 days before the transfer.
- There is no transfer fee if franchise is transferred to an entity (corporation or limited liability company) owned solely by you.
10. Optional Training and Conference Fee: up to $750 (per day)
- Due Date: At time of training.
- Realty ONE Group requires attendance of your designated personnel at training courses, seminars, conferences, or other programs (one attendee at Realty ONE Group’s BaseCamp Leadership Summits and two attendees at its annual ONE Summit).
11. Late Payment Penalty: $500, plus 10% of the amount past due
- Due Date: Immediately upon Realty ONE Group’s demand.
- The late payment penalty is payable each time you fail to make a required payment and is in addition to interest on the unpaid amount. You must also reimburse Realty ONE Group immediately upon demand for all reasonable costs of collection relating to delinquent amounts.
12. Late Charge: 5% of amount past due
- Due Date: With late payment.
- Payable only if you do not pay when due.
13. Interest: Annual Percentage Rate (“APR”) of 18% on the amount past due
- Due Date: Immediately upon Realty ONE Group’s demand.
- Interest begins from the date payment was originally due.
14. Costs of Collection: cost of collection of delinquent amounts (variable)
- Due Date: Immediately upon Realty ONE Group’s demand.
- In addition to the late payment penalty and interest on the unpaid amount, you must reimburse Realty ONE Group for its costs of collection of delinquent amounts.
15. Gift Cards: variable based on purchases
- Due Date: When ordered.
- Realty ONE Group does not currently use gift cards, but it has the right to begin using them at any time. If it does, you will have to purchase from a designated vendor, who may be Realty ONE Group or its affiliate, as you need them, the gift cards you are required to sell at your Store.
16. Records and Rights of Inspection (Audit): cost of audit (can range from $3,000 to $7,500), plus you must pay interest on any underpayment
- Due Date: Immediately upon demand for payment.
- You must reimburse Realty ONE Group the cost of the audit only if you understated Gross Revenues for any month by 5% or more, or its auditors need an unreasonable amount of time (more than eight hours) to assemble your records for audit.
17. Interim Manager Payments: daily charge which is currently $750 per day
- Due Date: Weekly, on demand.
- In addition to Realty ONE Group’s daily charge for the manager, you or your successor must pay the manager’s travel, lodging, and living expenses.
18. Reimbursement for Curing Franchisee Defaults: cost incurred to cure your defaults (variable)
- Due Date: Immediately upon Realty ONE Group’s demand.
- If you default in the performance of any obligation under the Franchise Agreement, or related agreement involving third parties, Realty ONE Group may cure the default for your account and on your behalf and you would then be obligated to reimburse it for all costs and expenses it incurs to do so.
19. Attorneys’ Fees and Costs: actual cost, which is variable
- Due Date: Immediately upon Realty ONE Group’s demand.
- Payable only if Realty ONE Group uses an attorney to collect money from you or otherwise enforces any provision of the Franchise Agreement or any other agreement with you.
20. Indemnification of Franchisor Against Losses: all “Losses,” as defined in section 16.2(d) of the Franchise Agreement (variable)
- Due Date: Immediately upon Realty ONE Group’s demand.
- The Franchise Agreement requires you to indemnify Realty ONE Group against Losses it may incur as a result of (i) your deviation from Realty ONE Group’s approved menu, (ii) unauthorized use of Realty ONE Group’s proprietary information or trademarks, (iii) the breach by you, any Principal Equity Owner, or your Manager of non-compete covenants, or (iv) your intentional tort or negligence relating to operation of the Outlet.
21. De-identification Enforcement Expense: cost and expenses relating to de-identification (variable)
- Due Date: Immediately upon Realty ONE Group’s demand.
- If you fail to de-identify your Store and your business upon termination or non-renewal of the Franchise Agreement, Realty ONE Group has the right, 15 days after written notice, to enter the Store and complete de-identification changes at your expense.
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