Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Summary of Significant Accounting Policies

Schedule of deferred revenue for franchise sales and annual dues

The activity consists of the following (in thousands):

	Balance at				Revenue		Balance at
	January 1, 2023		New billings		recognized (a)		September 30, 2023
Franchise sales	$	25,281	$	6,517	$	(6,715)	$	25,083
Annual dues		14,164		25,320		(25,661)		13,823
Other		6,626		14,675		(18,059)		3,242
	$	46,071	$	46,512	$	(50,435)	$	42,148

(a) Revenue recognized related to the beginning balance for Franchise sales and Annual dues were $6.2 million and $13.0 million, respectively, for the nine months ended September 30, 2023.

Schedule of commissions related to franchise sales

The activity in the Company’s capitalized contract costs for commissions (which are included in “other current assets” and “other assets, net of current portion” on the Condensed Consolidated Balance Sheets) consist of the following (in thousands):

			Additions to
	Balance at		contract cost		Expense		Balance at
	January 1, 2023		for new activity		recognized		September 30, 2023
Capitalized contract costs for commissions	$	3,974	$	2,129	$	(1,848)	$	4,255

Schedule of transaction price allocated to the remaining performance obligations

The following table includes estimated revenue by year, excluding certain other immaterial items, expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period (in thousands):

	Remainder of 2023		2024		2025		2026		2027		2028		Thereafter		Total
Annual dues	$	6,491	$	7,332	$	—	$	—	$	—	$	—	$	—	$	13,823
Franchise sales		1,826		6,714		5,536		4,204		2,786		1,384		2,633		25,083
Total	$	8,317	$	14,046	$	5,536	$	4,204	$	2,786	$	1,384	$	2,633	$	38,906

Schedule of disaggregated revenue

In the following table, segment revenue is disaggregated by Company-Owned or Independent Regions, where applicable, by segment and by geographical area (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
U.S. Company-Owned Regions	$	35,504	$	39,975	$	105,440	$	121,862
U.S. Independent Regions		1,668		1,819		4,896		5,397
Canada Company-Owned Regions		10,607		10,764		30,946		32,673
Canada Independent Regions		721		723		2,168		2,141
Global		3,251		2,908		9,653		9,193
Fee revenue (a)		51,751		56,189		153,103		171,266
Franchise sales and other revenue (b)		4,812		6,466		21,649		21,902
Total Real Estate		56,563		62,655		174,752		193,168
U.S.		15,638		17,186		48,043		52,386
Canada		4,956		5,201		14,440		15,202
Global		259		349		789		908
Total Marketing Funds		20,853		22,736		63,272		68,496
Mortgage (c)		3,640		3,194		10,444		9,337
Other (c)		167		358		603		1,118
Total	$	81,223	$	88,943	$	249,071	$	272,119

(a) Fee revenue includes Continuing franchise fees, Annual dues and Broker fees.

(b) Franchise sales and other revenue is derived primarily within the U.S.

(c) Revenue from Mortgage and Other are derived exclusively within the U.S.

Schedule of reconciliation of cash, both unrestricted and restricted

The following table reconciles the amounts presented for cash, both unrestricted and restricted, in the Condensed Consolidated Balance Sheets to the amounts presented in the Condensed Consolidated Statements of Cash Flows (in thousands):

	September 30, 2023		December 31, 2022
Cash and cash equivalents	$	89,820	$	108,663
Restricted cash:
Marketing Funds (a)		17,243		29,465
Settlement Fund (b)		13,750		—
Total cash, cash equivalents and restricted cash	$	120,813	$	138,128

(a) All cash held by the Marketing Funds is contractually restricted, pursuant to the applicable franchise agreements.

(b) Represents the net amounts held in the Settlement Fund as part of the settlement of the Nationwide Claims. See Note 11, Commitments and Contingencies for additional information.

Schedule of cost charges to intersegment

Costs charged from Real Estate to the Marketing Funds are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Technology − operating	$	1,169	$	3,526	$	3,507	$	11,269
Technology − capital(a)		—		(277)		(203)		884
Marketing staff and administrative services		1,441		1,493		4,416		4,174
Total	$	2,610	$	4,742	$	7,720	$	16,327

(a) During the first quarter of 2023 and the third quarter of 2023, the Company determined that certain development projects were no longer needed and therefore $0.2 million and $0.3 million, reflecting the cost of work in process assets that would no longer be placed in service, was refunded to the Marketing Funds.