Incubating Market Center (Canada Only)

When a launching market center is incubating with a host market center, the two market centers may agree to split a percentage of income.  Please contact MCA Support at MCASupport@kw.com  if you have any questions or problems with following the instructions below in setting up the Incubating Market Center. A copy of the Incubation Agreement must be on file with the KWRI Franchise Systems Department and available if requested.
 
We understand that agreements are made between owners for incubating 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) section of this manual.
 
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.
 
With that in mind, please follow these guidelines:
 

1. The host Market Center posts all closings, calculates and pays Profit Share each month.
2. MCA in host MC will set up below the line owner expense and note payable user-defined account named (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 journal entry 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 the Associate Tech fee 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 WinMORE, all remaining closings between host MC and incubating MC will be entered using the Company Dollar Transfer (U.S. and Canada) to allow Profit Share calculation in both Market Centers.