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Business Description

REALTY EXECUTIVES INTL. SVCS. LLC is an Arizona limited liability company that was organized on April 1, 2014. Our principal business address is located at 8324 East Hartford Drive, Suite 100, Scottsdale, Arizona, 85255, and our telephone number is 800-252-3366. Our agent for service of process is disclosed in Exhibit “B” to this Disclosure Document. We do not do business under any names other than “REALTY EXECUTIVES INTL. SVCS. LLC” and the trade name “Realty Executives International

Prior Experience

We began offering REALTY EXECUTIVES franchises in May of 2015. We are not engaged in any business other than offering the REALTY EXECUTIVES franchises described in this Disclosure Document and administering the REALTY EXECUTIVES franchise system. We have never offered franchises in any other line of business. We have never directly operated a REALTY EXECUTIVES brokerage. However, our affiliate does own a Realty Executives brokerage in California and may own additional brokerages in the futur

Business Offered

We grant franchises to operate real estate offices under the REALTY EXECUTIVES name using our unique system, which includes the “original 100% Commission Concept” as well as our distinctive logos, promotional materials, operating systems and proprietary Intranet portal (the “System”). We offer franchises to franchisees that operate pre-existing real estate businesses as well as franchisees that have no prior experience in operating a real estate business. We will show you how to utilize our System in operating a real estate office that provides a variety of real estate services, including leasing, listing, purchasing, referral, selling, trading and other services of a similar nature (your “Business”). We do not show you how to operate a real estate business. We will grant you a license to use certain trademarks, service marks, logos and trade names, including the REALTY EXECUTIVES name (collectively, the “Marks”) relating to the operation of your Business. The operational aspects of a REALTY EXECUTIVES franchise are contained within our confidential Operating Manual (the “Manual”). You will operate your REALTY EXECUTIVES franchise as an independent business using the Marks, the System, the REALTY EXECUTIVES name, as well as the support, guidance and other methods and materials provided or developed by us. You will offer and provide real estate services to the general public under the terms and conditions contained within the franchise agreement (the “Franchise Agreement”) and the Manual. The form of Franchise Agreement is attached to this Disclosure Document as Exhibit “C”. You may offer no other goods or services in conjunction with the System or the Marks without our prior written approval.

Initial Fees

You must pay us a non-refundable initial franchise fee of $10,000. However, if we believe an adjustment is warranted, we may waive, reduce or change the amount or the payment date for the initial franchise fee. There is no formula for these adjustments and each situation is evaluated on a case-by-case basis. Relevant factors may include: larger or more experienced prospective franchisees; prospective franchisees with whom we or our affiliates have had prior business experience; prospective franchisees departing from other franchise or licensing systems; and prospective franchisees in other unique circumstances. We did not charge or collect any initial franchise fees in 2018. If you purchase your franchise through a Territory Release Arrangement (described in Item 1), you will pay us an initial franchise fee of $1,000 and you will pay the Territory Releasor an additional initial fee that is negotiated between you and the Territory Releasor. The entire amount of the initial franchise fee is due in full at the time you sign the Franchise Agreement unless we finance all or a portion of the fee. See Item 10 for a discussion of the financing we offer. The initial franchise fee is not refundable under any circumstances and is uniformly imposed except as otherwise discussed above. Fee Deferral All fees referenced in Item 5 of this Disclosure Document are subject to deferral pursuant to order of the State of California. Accordingly, you will pay no fees to us until we have completed all of our material pre-opening responsibilities to you and you commence operating the franchised business

Financing

From time to time, we may finance the initial franchise fee as well as certain startup costs, including equipment, office supplies, signage and real estate improvements. Depending on the credit-worthiness of the franchisee, we may finance up to 100% of these costs. In determining whether to approve you for financing, and if so, the amount that we will finance, we will consider various factors including your credit report and other indicia of your creditworthiness. We do not guaranty any of your notes, leases or other obligations. You must sign a promissory note in our favor with an initial principal amount equal to the amount financed. You must pay us the non-financed portion of the initial franchise fee when you sign the Franchise Agreement. The financing terms are as follows: Amount Financed – Up to 100% of initial franchise fee and cost of equipment, office supplies, signage and real estate improvements Interest Rate – ranges from 6% to 7% APR – ranges from 6% to 7% Repayment Period – Ranges from 1 to 3 years Payment Terms – Equal monthly installments of principal and interest unless otherwise agreed upon* * Depending on the duration of the repayment period, we may vary the structure of the financing. For example, we may offer “interest only” payments for a portion of the repayment period. Or in some cases we may offer “interest only” payments for the duration of the repayment period with a balloon payment of the entire principal amount upon the expiration of the repayment period. You may prepay all or a portion of the Promissory Note at any time without penalty. If you are an entity, everyone owning an equity interest in you must sign a personal guarantee for the financed amount. Depending on the creditworthiness of such individuals and the community property laws of the states in which they reside, we may require that the spouse of one or more of these individuals sign the personal guaranty as well. You must also sign a Security Agreement granting us a security interest in all of your assets (a detailed description of the collateral is included on Exhibit A to the Security Agreement). If you fail to make any payment under the Promissory Note when due, we may accelerate the entire principal balance outstanding under the Promissory Note. In addition, if you fail to make any payment when due, we may charge you default interest on the past due amount at the rate of 24% per annum (prorated on a daily basis) or the highest rate permitted by your state's law and, if we so decide, we may terminate your Franchise Agreement, in which case you will not be entitled to a refund of any fees that you had previously paid to us and we may take any action that we feel appropriate to collect any amounts that remain unpaid under the Promissory Note, including foreclosing on our security interest in the collateral. You must reimburse us for all collection costs that we incur in enforcing our rights under the Promissory Note. You agree not to assert: (a) demand, diligence, grace, presentment for payment, protest, notice of nonpayment, nonperformance, extension, dishonor, maturity, protest and default; and (b) recourse to guaranty or suretyship defenses (See Section 10 of the Note). Our form of Promissory Note and Security Agreement are attached to this Disclosure Document as Exhibit “L”. We reserve the right to sell or assign the Promissory Note although it is not our current practice to do so.

Franchisee Revenue and Profit

The FTC's Franchise Rule permits a franchisor to provide information about the actual or potential financial performance of its franchised and/or franchisor-owned outlets, if there is a reasonable basis for the information, and if the information is included in the Disclosure Document. Financial performance information that differs from that included in Item 19 may be given only if: (1) a franchisor provides the actual records of an existing outlet you are considering buying; or (2) a franchisor supplements the information provided in this Item 19, for example, by providing information about possible performance at a particular location or under particular circumstances. 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 Federal Trade Commission, the appropriate state regulatory agencies, and our management by contacting our Legal Department at 8324 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255 or by phone at 800 252-3366.