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Business Description

We are a Delaware limited liability company. We were originally incorporated as a corporation on September 17, 1979 and converted from a corporation to a limited liability company on December 28, 2004. We do not do business under any other name. We are a wholly owned subsidiary of Realogy Services Group LLC (“RSG”), a Delaware limited liability company, a direct wholly owned subsidiary of Realogy Group LLC, a Delaware limited liability company (“Realogy Group”). Realogy Group is a direct wholly owned subsidiary of Realogy Intermediate Holdings LLC (“Intermediate Holdings”), a Delaware limited liability company, and a direct wholly owned subsidiary of Realogy Holdings Corp., a Delaware corporation (“Realogy Holdings”). Realogy Franchise Group LLC (“RFG”), a Delaware limited liability company, which is a wholly owned subsidiary of RSG, provides to us administrative services and RSG and its subsidiaries provide certain shared services as described below. Our principal business address, as well as the principal business address of RFG, RSG, Realogy Group, Intermediate Holdings and Realogy Holdings, is 175 Park Avenue, Madison, New Jersey 07940. There are no predecessors that need to be disclosed in this Item 1. On October 12, 2012, Realogy Holdings consummated an initial public offering of shares of common stock and its shares are listed on The New York Stock Exchange under the symbol, “RLGY.” Realogy Group and Realogy Holdings issue joint audited annual financial statements and continue to serve as our Guarantors.

Prior Experience

We began granting CENTURY 21® real estate franchises directly to brokers in December 1995. From February 1972 until November 1995, we only granted subfranchises. The subfranchises authorized the grantees, called subfranchisors, to offer CENTURY 21® franchises to real estate brokers within particular territories. We owned some of the subfranchisors, and others were independently owned. We merged with the United States subfranchisors that we owned in December 1995 and in 1996 we began selling CENTURY 21® franchises directly. The subfranchisors or their predecessors had been granting CENTURY 21® franchises since July 1972. We do not own or operate any real estate offices in the United States, although our affiliates do operate such offices (as described below). We have never granted franchises in other lines of business. We do not operate any CENTURY 21® real estate brokerage offices.

Business Offered

We offer franchises for real estate sales offices in the United States to owners of existing real estate brokerage businesses and in certain situations we may offer a franchise to newly formed real estate brokerages (the “Franchise” or the “Business”). The Franchise authorizes you to operate a real estate sales office using the CENTURY 21® service mark and other trademarks, service marks, designs, logos and other commercial symbols we periodically designate (collectively, the “Marks”), and using a system that we have developed which includes access to brand specific systems, productivity resources, basic business development support, education, real estate referral and broker communications procedures, marketing and advertising services, products and other support funded by the brand marketing fund (“Brand Marketing Fund” or “BMF”) and various other items (the “System”), all in accordance with the terms of our Real Estate Franchise Agreement (“Franchise Agreement”) and the mandatory provisions of our Policies and Procedures Manual (“P&P Manual”). If you meet our financial, professional, operational, and other standards, operate in a market in which we seek to be represented, and agree to pay our initial franchise fee, we may grant you a Franchise. The Franchise permits you to offer residential real estate brokerage services, commercial real estate services, and limited property management services from a specified office location (the “Main Office”) and other authorized Office locations (the Main Office and other authorized office locations collectively referred to as a “CENTURY 21® Office” or “Office”) utilizing the System.

Initial Fees

If you are purchasing a franchise from us, you will pay us an initial franchise fee of $25,000 for the Main Office when you sign the Franchise Agreement. If we approve you for a CENTURY 21® franchise, we will countersign your Franchise Agreement. The initial franchise fee is non-refundable and is fully earned by us upon our countersignature. As further described in Item 1, we have a diversity and veteran program under which eligible franchisees may pay a reduced initial franchise fee. As of the issuance date of this disclosure document, the reduced initial franchise fee under the program is $5,000. The initial franchise fee for each additional Branch Office will be $10,000 and due when the Branch Office is added to the Franchise Agreement. If you are an existing franchisee and acquire another qualifying real estate brokerage business that you combine into your Office(s), we will not charge you an additional initial franchise fee. If you are approved to open additional CENTURY 21 Branch Office(s), you will sign a Location Addendum to your Franchise Agreement to amend it to reflect the existence and location of the additional Branch Office(s) (see Location Addenda, Exhibit C-2 or C-3). We may condition the approval of additional offices on certain other terms and conditions, including minimum annual royalty fees, which terms will be included in the Location Addendum We do not refund any initial franchise fees, except we will refund your initial franchise fee if we do not accept you as a franchisee. You must pay us any franchise fees in a lump sum, unless we agree to other arrangements or to payment terms under the financing programs described in Item 10. We have the right to vary, waive (in whole or in part), negotiate or make an exception to our published fee structure and/or payment terms for any reason, including without limitation large or otherwise significant transactions. We also have the right to negotiate conversion funding or other incentives that may vary in type, amount and duration. Our exercise of these rights may have the effect of directly or indirectly decreasing the initial franchise fee. See Item 10. If we permit you to open a Limited Purpose Office, we will charge you a one-time, non-refundable fee of $1,000, and you will be required to sign a Limited Purpose Office Addendum. See Item 1. In 2018, initial franchise fees paid by franchisees ranged from $0 to $25,000 for a Main Office, and from $0 to $10,000 for a Branch Office.

Financing

Neither we nor any related company is obligated to provide you any financing. We or a related company, however, have the right to offer you financing to assist with conversion costs or growth opportunities. This financing will be based on several factors, including without limitation your financial need, credit history, ability to repay, net worth, your business operations, including history of growing your business, and your stability as well as our need for the development of your market area. Depending upon these factors, we may offer you financing up to an amount equal to a percentage of the fees we expect to receive from your operations. We have the right to require you to furnish us with financial statements, tax returns and other documents. The terms of any financing, including the amount, the term of repayment, the amount of principal to be repaid, the amount of interest to be paid (where applicable), the security and other relevant terms are subject to negotiation between the parties as described below. We may require you to undergo a six-month operational review of your Franchise prior to the granting of any financing. The review will include a financial analysis, assessment of the use and understanding of our programs, and your adherence to the requirements under the Franchise Agreement. Except as disclosed above, we do not offer financing that requires you to waive notice, confess judgment or waive a defense against us or the lender, although you may lose your defenses against us and others in a collection action on a Note that is sold or discounted. We have no plans to sell or assign any Note from you or any other franchisee; however, we have the right to do so in the future. Upon any sale or assignment, we will not remain primarily obligated to provide the financial goods or services. We do not guarantee your obligations to third parties. If RSG has a lender that provides finance opportunities to franchisees under the Preferred Alliance program, we or RSG may receive payments from such lender. As of the issuance date of this disclosure document, RSG does not receive payments from lenders. See Item 8.

Franchisee Revenue and Profit

We do not make any representations about a franchisee’s future financial performance or the past financial performance of company-owned or franchised outlets. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor’s management by contacting Tom O’Hern, 175 Park Avenue, Madison, New Jersey 07940, (973) 407-6514, the Federal Trade Commission, and the appropriate state regulatory agencies.