The internet affords Realtors every opportunity to do vast amounts of research before making business decisions.
With over 1.4 million Realtors now having access to the internet it is not difficult to read the many comments and reactions Realtors have experienced with thousands of real estate brokerage companies.
Access to state real estate commission records, fines, and complaints are readily available.
How many Realtors really do their proper due diligence prior to purchasing a Real Estate Franchise? My experience of having sold hundreds of Franchises over a 22 year period is that very few Realtors do serious research. Many just buy on their gut feelings as to whether or not a concept or sales person is believable. You read it correctly.
A top real estate sales person with franchise x is approached by a franchisor company x sales person and suggests that the real estate agent may want to consider having their own real estate company and franchise. The agent thinking that their broker is very successful thinks why not. It is that simple and easy to sell a Real Estate Franchise.
Franchise companies are grown from within. Meaning a new franchise company will reproduce itself internally. A new franchisee may become successful because they may be very capable. He or she hires a great group of agents and then all of a sudden one of those agents will purchase the same brand and then takes 10 agents with them. Last year I saw a Franchise Sales Company secretly sell a franchise to the partner of one of their existing Real Estate Franchises. When the new office opened a group of agents left and went to the new office.
The franchisor does not loose any agents but gained another new office and it's respective fee's and the cycle is thereby continues. When this occurs the profitability of the first franchise is diminished due to the loss of 10 income producing agents.
Many large Franchise companies have grown though this mechanism or technique.
Not a good thing for the Real Estate Brokerage Company.
As a Management Consultant to the Real Estate Industry I have seen how the industry has evolved over the last 30 years. I can now also see a retraction within the industry back to being an independent brokerage company. With the Internet now hosting listings everywhere there is less of a need for a national brand.
If you are considering the purchase of a Real Estate Franchise feel free to give me a call. It may be the most profitable phone call you will ever make.
Michael J. Stefonick
Optimix Marketing, Ltd.