Should you buy a Real Estate Franchise or go it alone as an independent brokerage? This is a big question for real estate brokerages. In the end the answer lies in how much additional growth a franchise could add to your business and what costs and time a franchise system can help you avoid.
Additional growth for your business would need to come in many different ways, such as winning more substantial listings, gaining credibility in new property types, recruiting more agents, and expanding your circle of influence. Enhancing your offerings can lead you to higher commission rates and increased buyer leads, enabling you to do more deals on both sides.
Cost and Time Savings
Partnering with a franchise can bring significant cost and time savings. You can benefit from additional advertising for your listings, professionally developed and maintained office and agent websites, CRM systems, and design services.
Further franchise benefits include:
- Discounted signs and marketing materials
- Agent recruitment and training
- Single Source Services (versus managing multiple vendors)
- Required brokerage forms, documents and supplies
- Branded items
- Real estate and business consulting
- Keeping up with innovative real estate services
Joining a franchise can also boost your brand credibility nationally and offer a competitive edge against other national brands in your area.
The work and services a real estate brokerage must provide to clients and their agents are significant, costly, time consuming, and difficult to manage. These services are evolving constantly and must be managed continuously. As an Independent brokerage, you will need to spend the time and money to find solutions and vendors to provide these required services. Additionally, you will need to ensure your pricing and solutions are competitive each year. A well-run franchise can offer some or all of these required services for you at a substantial cost and time saving and provide new avenues for growth.
Marketing and Technology
Real estate requires a large amount of marketing and technology. From business cards to yard signs, social media to websites and so much more. Marketing and technology require a tremendous amount of time, practice and investment. As an independent brokerage, you will need to source vendors for required technology and design your own marketing and advertising support. A strong franchisor will provide significant assistance in marketing and technology and may cover all or most of your needs.
One of the biggest challenges for real estate brokerages is training the broker and agents beyond required CE classes. Having progressive and innovative training keeps you and your team current and continually growing. This is critical to ensuring you, your team and your overall business remain competitive over time. Many agents site a lack of training and a lack of continuing education as a key reason they leave a brokerage, so as a retention tool, regular training is paramount. You will need to provide on-going lessons to gain the advantages it offers. This can be accomplished as an independent brokerage, but does take a considerable amount of time, effort and money.
Alternatively, the best real estate franchises offer a tremendous amount of online and live training options for their affiliates, taking the burden off the broker and enabling the team to gain continuous development. A strong training program is one of the biggest deciding factors in why agents choose the brokerage they choose. A great training system provided by a Franchisor takes the burden of training the team off of the brokerage.
Benefits of Joining a Franchise
Real Estate Franchise systems vary greatly in their ability to provide these services and savings. You should evaluate each system carefully and compare their program cost to the cost of proving the services and work on your own. Take into account your long-term goals and plans for your business.
There is a value in not operating alone, but as a member of a broader team and network all focused on the same goal. An effective franchise will provide volume cost savings, a large network and support team to provide added assistance in the challenges in running your business. They can provide added value to new clients whom may be more familiar with the national brand versus your company. This is especially true for clients moving into the area or out of state property owners.
As a final consideration, you should plan for your eventual retirement/exit strategy as often times a franchised office will bring more value to the final sale and be easier to attract more buyers to purchase your business. Potential buyers will find it much easier to carry on a franchised real estate office versus an independent one that may have more value under the original ownership, for example “Franchise Brand” | “Company Name” can easily be converted to “Franchise Name” | “New Company Name” without losing the brand equity in the market with a totally new company name.
There are many other factors to weigh when deciding whether you should buy a real estate franchise or go it alone as an independent brokerage, but at the highest level it becomes a question of your business plan and vision, how you plan to drive continuous growth, how you can run most efficiently and your long-term exist strategy. You should evaluate what additional growth can be achieved, what your cost saving would be, potential time savings for you and each element of running a successful real estate brokerage leveraging a franchise vs doing it all yourself.