What’s the value of a real estate franchise?

While an independent agency may be able to build up a loyal and repeat client base after years or even decades servicing the same location, a real estate franchise offers agents and principals a way to bypass this, to an extent, with a nationally recognised brand.

When home sellers look for someone to entrust selling or managing their most significant asset, they may feel more secure in dealing with an agency that has an established name and identity. But it’s also clear that the traditional franchise model in Australia comes with frustrations for successful principals – namely, having to hand over a significant percentage of your commissions, alongside high ongoing franchise fees.

With the real estate landscape changing in response to the internet, it’s worth reflecting on what value is derived from being part of a franchise and how much a national franchise brand contributes to your success.

An established brand and identity

There’s an inherent professionalism that comes with being part of an established franchise or network. This is conveyed in the brand messaging, corporate livery, the retail experience with standardised office fit-outs and the familiar templates bringing consistency to every piece of marketing, from stationery to signage, to the myriad of advertising materials.

Ask yourself, does your client tell their friends and neighbours about how good the franchise brand is, or do they talk about their particular agent?

Support from head office

Typically, your franchise office will support you with listing management, training and support. Traditional real estate franchises also offer national advertising campaigns or national publicity such as ‘win a house’ competitions. Whether these provide useful leads at a local level, however, has to date been difficult to quantify, as has been the speed in alerting an agent before a lead goes cold. Perhaps this is why real estate referral websites exist?

A successful franchise should ideally offer something unique that sets it apart from its competitors, for example, comprehensive marketing campaigns, or extensive staff training. In a selling environment that is increasingly dominated by internet searches, a competitive franchise will have a strong online presence, skilfully utilise social media, and be supported by the latest back-end software to ensure continued success.

What are the limitations of a franchise?

Joining a national or international real estate franchise comes with significant upfront investment and ongoing monthly costs. You split your commission on each and every property sale. In a good month, you will hand over a large portion of your earnings to your franchise head office, and in slow months, you still have fees to pay. To pay the franchise substantially more because you’ve had a good month and not receive anything more from the franchise seems intrinsically flawed.

Where does personal branding come into it?

The real estate industry in Australia has evolved, with many real estate agents and principals finding that the traditional franchise model doesn’t suit them. Today, the value of a real estate franchise brand lies in what an agent can do with it. A strong and established national or international brand is not a magic fix-all solution. And when an agent is very successful in his or her local area, it is often due to their individual talents, reputation and energy, with the franchise benefiting, rather than the other way around. In other words, you are your own brand.

Some reputable national or international brands once ran TV and radio campaigns. Today, most of this above the line advertising seems to have disappeared. Brand and marketing activities have become more localised. Personal contacts and professional reputations are garnered by targeting people geographically. Which begs the question, is a national or international brand relevant, or can a group network with a strong foothold in a region be more powerful?

What comes first, the brand or personal brand?

Does a home seller who has just sold their home and is happy with the outcome tell their friends and neighbours about how good the franchise or brand was, or do they talk about what their particular agent did for them to secure the sale?

And in an era where social media such as Facebook or Instagram works alongside and increasingly supersedes traditional advertising campaigns, again, people will respond to a recognisable face more than a big name franchise.

While there is still much value in being part of a real estate network, we believe the traditional franchise model needs to change. We hear agents and principals question the value of a traditional franchise brand frequently. Real estate business owners need to ask themselves if they share the vision of their franchise and whether it is still the best option for them as they build on their expertise and reputation.  

Savvy real estate agents are now in a position to choose from a new network model alongside the established ones. The new model, like One Agency, makes for an exciting new chapter in real estate where it’s no longer simply a choice between going it alone or joining a franchise.