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Policy and ProceduresManual for FranchisesAUG2019

TABLE OF CONTENTSBank Information . . 2Process for New Sellstate Franchise Affiliates with SunTrust . . 3New Agent Form . . 4Salesperson Contract . . 5Agent Asset Development Royalty Sharing Program . . 11Agent Asset Participation Form . . 14Direct Deposit Payroll . . 15Direct Payment . . 16W-9 Form . . 17Agent Termination Form . . 18Accounting Procedures . . 19Description of Corporate Procedures . . 20Commission Cover Sheet . . 22Commission Disbursement Form . . 23Tracker Sales Report . . 24Check Sample . . 25Deposit Slip . . 26HUD Statement . . 27Daily Commission Worksheet . . 29Monthly Debit Report . . 30Debit Report Sample . . 31Monthly AAD Report . . 32Monthly Reporting Form . . 331

Bank InformationIn order to comply with Sellstate’s centralized processing systems and expedite procedures, youwill need to open a Business Checking Account by contacting one of our representatives below.This account will be used for commission related payments only. You will need to have asecond account to be used as your operating account for all other business expenses.Please set this account up as soon as possible, as this procedure will sometime take up to 30days to implement.The following banking representatives are familiar with Sellstate’s Online TreasuryManagement procedures. Please do not go into a local branch to open an account because theaccount will not be set up correctly.WELLS FARGOContact: Cherlyne Rowland,Ph: (239) 896-1763 Fax: (239) 896-1819.Email: cherlyne.rowland@wellsfargo.comSUNTRUSTContact: Sean MurphyPh: (239) 418-2726 Ph: (239) 313-1705Email: sean.murphy2@suntrust.com2

Process for new Sellstate Franchise Affiliates with SunTrust Banks, Inc.1. New Franchisee client opens account at the branch of their choice--Ahead of this they should acquire all of the necessary licensing and registrationsneeded to open a business account in the state for which they operate. It is preferredthey contact Sean Murphy to coordinate the branch they will be opening their accountat. This way we can advise the branch of the planned visit to open the account, arrangeintroductions and handoffs. We can better maintain contact to capture the new accountinformation for further agreements to be drafted in a timely manner.Sean Murphy, Commercial Relationship Manager – Southwest FloridaOffice: 239.418.2726, Mobile: 239.313.9387, Email: sean.murphy2@suntrust.com12751 New Brittany Blvd 2nd Floor Fort Myers FL 339072. The branch sends Sean the new account numbers to be added per the SellstateCorporate model for drafting accounts of the franchisees.3. 3. We (SunTrust) complete the SunView and OCM affiliate agreement forms forexecution.4. We (SunTrust) send the forms to Sellstate corporatea. Sellstate Corporate collects the signatures from the franchisee and the alsocomplete corporate signatures.5. Sellstate Sends Sean completed SunView and OCM affiliate agreement forimplementation.6. Process complete for Sellstate Corporate and the new franchisee. Awaitingimplementation of the OCM and SunView (OTM) service.Additional note: The franchisee should clearly designate which account is to be the commissionaccount, which is the one set up for OCM and SunView service. This is particularly importantshould the new franchisee elect to have both operating and commission accounts opened atSunTrust. This can be done via a nickname on the account, and/or instruct the branch whichaccount is which.3

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Accounting ProceduresSellstate Realty Systems Network, Inc. disburses commissions for all Sellstate franchises. Anindividual franchise may not pay their agent directly unless paid at title. Sellstate RealtySystems Network, Inc. produces all of the 1099’s for their franchises, so all income must flowthrough our system in order for the 1099’s to reflect the correct agent income.If you deposit a commission by the respective bank’s cut off deadline, the commissiondisbursement must be emailed to Sellstate Realty Systems Network, Inc. the following businessday by 11:00 am in your respective time zone. The funds will be disbursed to the agent’saccount, as long as the funds are available in the broker’s account. The method of payment isvia ACH (Automated Clearing House) and not via Wire Transfer. This means that the fundsusually will be available to the agent the business day following the date it is disbursed bySellstate.Please note that business days do not include Saturday, Sunday or Federal Bank Holidays.The information required by our accounting department to process your commission is asfollows:1.2.3.4.5.6.Commission Cover Sheet.Completed Tracker FormCopy of Commission CheckCopy of Deposit Slip and Receipt from BankFully Executed Property HUD-1 Statement.Completed Commission Disbursement19

Description of Corporate ProceduresThere are five fees which are paid by the franchisee to Sellstate Realty Systems Network, Inc.(Corporate franchisor). These fees are owed by the individual franchisee to Corporate.Corporate will attempt to collect them directly from the agent on behalf of the franchisee.However, it is the responsibility of the franchisee to pay Corporate regardless if payment iscollected from the agents. Your individual salesperson contract should detail the fees that eachsalesperson will owe.These five fees owed by the franchisee are collected from the agents as follows:1. Annual FeeThe franchisee must pay an annual fee for each agent who is licensed to the franchise.The fee is due on June 1st of each year, and is not pro rated. The fee is withdrawn fromthe accounts of each agent. If the fee cannot be withdrawn from the agent’s account,then the franchise is responsible to pay the fee. The amount of the fee owed by thefranchisee to Corporate is stated in schedule A of the franchise agreement.2. Monthly Licensing FeeThe franchisee must pay a monthly licensing fee for each agent licensed to thefranchise. They must ensure that all agent licenses are kept current with the statelicensing board. The franchisee is responsible for completing the “Sellstate MonthlyDebit Report” each month on the 25th of the month, for the following month. Forexample, on May 25th you owe the licensing report for June. The fees are withdrawnfrom the individual agent’s accounts on the 1st business day of each month. If the agentcannot pay the fee, the franchisee is responsible for paying the fee in their behalf.3. Corporate Strategic Development FundThis fee is equal to 2% of all commissions earned by the agent on a real estate sale. Thefee is collected from the agent when a Commission Disbursement Form is submitted bythe franchisee to pay the agent. This was formerly known as the National MarketingFund.4. Agent Asset Development Fund (also known as AAD)The Corporate Accounting Department deducts 5% from the agent’s gross commissionand deposits the amount into a designated bank account for the AAD program. Anadministrative fee of 10.00 per transaction is deducted from the amount collected, andthen the remaining amount is paid to the sponsoring agent on the 15th of the month, orthe next available business day, following the calendar month. These payments arelisted on the Commission Disbursement Form. Please review the AAD Program guide formore specific information.20

5. Transactional FeeThe Corporate Accounting Department deducts a flat fee from each real estatetransaction that an agent closes. The fee is based on the amount of the commissionearned.6. Broker’s FeesMany brokers also charge their agents additional fees. If the franchisee wishes for theaccounting department to collect those fees in their behalf, then the fees will be listedon the Commission Disbursement Form and those monies will remain in the broker’saccount.7. Computer FeesA fee for being part of the Sellstate online computer system is debited from theFranchisee’s account on the first day of each month.21

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Monthly Debit ReportOnce a month every franchise is required to send in their Licensing Report. The report is dueon the 25th of the month prior to the reporting month. For example the report for Novemberwould be due on October 25th.This report is to include every person who is licensed to the franchise. Sellstate will thenwithdraw the fees from your agent’s accounts and will remit the fees due to Corporate and thefees due to the Franchise. In the world of banking, the fees are “debited” from the agents,therefore the knick name of the “Debit Report”.This will give you the opportunity to collect the fees each agent is contractually obligated to paythe franchise. You will also be able to collect any monies outstanding. If the bankinginformation is not provided for an agent, then it will be the responsibly of the franchise tocollect what is due.30

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implementation of the OCM and SunView (OTM) service. Additional note: The franchisee should clearly designate which account is to be the commission account, which is the one set up for OCM and SunView service. This is particularly important should the new franchisee elect to have both operating and commission accounts opened at SunTrust.