Incubating Market Center – (U.S. Only)

When an incubating Market Center is in the process of applying to be a new market center, follow the process below to ensure a proper set-up. A copy of the Incubation Agreement must be on file with the KWRI Franchise Systems Department and available if requested.  Additionally, contact the region for guidance on preparing to open the new market center.

We understand that agreements are made between owners for incubation of market centers regarding income. While incubating, all Company Dollar and Profit Share will be calculated in the host market center. When both market centers are approved (i.e. have an active market center number and WinMORE systems) this is not a problem as the MCAs can book the Company Dollar on each market centers’ financials per the instructions outlined in the Company Dollar Transfer (U.S. and Canada).
 
However, in the scenarios where an incubating market center has not been issued a number and is not an approved market center any financial agreements are entered below the line. Specific guidelines must be followed to ensure the integrity of the Profit Share calculations.
 
Please follow these guidelines:

1. The host market center posts all closings, calculates and pays Profit Share each month.
2. The MCA in the host MC will set up a below the line owner expense and note payable user-defined account (Ex. Note Payable – Incubating MC Name).
3. The host MCA prints a DA list for each incubating associate and calculates the percentage of Income to be paid to the incubating market center based on the agreement each month.
4. The host MCA prepares a journal entry using the percentage of Income calculated in the previous step, as follows:
   • Debit:   Below the line – Owner expense
   • Credit:  Note Payable – Incubating MC Name
5. Once the incubating market center is approved (i.e., has an active Market Center number), the MCA from the host market center will cut a check and code it to Notes Payable – Incubating MC Name to zero out the account.
6. At this time, the host MC needs to change the production status of each incubating associate to “O.” The status should remain as “A.” This will prevent the host MC from having to collect Associate Tech fees for these incubating associates. It is the responsibility of the new MC to collect Associate Tech fees from their associates. The month that the incubating office transmits for the first time, the host MC should change the incubating associates’ status to “PO” with production status “O” so that associates are not double counted in the agent count for the month.
7. The incubating market center will set up a below the line owner income account. This account will be used to receive the check issued from the host MC. The entry will appear as follows:
   • Debit:   Cash – Operating Checking
   • Credit:  Below the line – Owner income
8. Once both market centers have access to their respective WinMORE, systems, all remaining closings between host MC and incubating MC will be entered using the instructions outlined in the Company Dollar Transfer instructions (U.S. and Canada) to allow Profit Share calculation in both market centers.