Company: LRHC
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001213900-25-032211
Chunk: 1439

Company: La Rosa Holdings Corp.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 4
Chunk 1439
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 sale or renewal of franchises and other franchise revenue, (v) coaching, training and
assistance fees, (vi) brokerage revenue generated transactionally on commercial real estate, (vii) fees generated from title services
revenue and insurance and (viii) fees from our events and forums.

The majority of our revenue
is derived from fees and dues based on the number of agents working under the La Rosa Realty brand. Due to the low fixed cost structure
of both our Company and franchise models, the addition of new sales agents generally requires little incremental investment in capital
or infrastructure. Accordingly, the number of commission producing sales agents in our Company and our franchisees is the most important
factor affecting our results of operations and the addition of new agents can favorably impact our revenue and our earnings before interest,
taxes, depreciation and amortization (“EBITDA”). Historically, the number of agents in the residential real estate industry
has been highly correlated with overall home sale transaction activity. We believe that the number of agents and those that produce commissions
in our network is the primary statistic that drives our revenue. Another major factor is the cyclicality of the real estate industry that
has peaks and valleys depending on macroeconomic conditions that we cannot control. And finally, our revenues fluctuate based on the changes
in the aggregate fee revenue per sales agent as a significant portion of our revenue is tied to various fees that are ultimately tied
to the number of agents, including annual dues, continuing franchise fees, and certain transaction or service-based fees. Our revenue
per agent also increases in other ways including when transaction sides and transaction sizes increase since a portion of our revenue
comes from fees tied to the number and size of real estate transactions closed by our agents. While the Company was not named as a defendant
in any of the recent class action lawsuits alleging antitrust violations, it is possible that it could be a litigant at some point in
the future. Several of these lawsuits have been settled (see “Risk Factors - Adverse outcomes in litigation and regulatory actions
against the NAR, other real estate brokerage companies and agents in our industry could adversely impact our financial results).
These settlements will result in changes in the way real estate brokers are compensated for their services. Most notably, home
sellers will no longer be required to pay buyer agent commissions which will result in lower buyer agent compensation. We cannot predict
the full breadth of the outcome of these lawsuits but believe that they will result in a significant adverse effect on