RISMEDIA, Oct. 9, 2007-Realogy Corporation, a global provider of real estate and relocation services, announced that it has entered into a long-term agreement to license the Better Homes and Gardens® Real Estate brand from Meredith Corporation, one of the nation’s leading media and marketing companies. Realogy intends to build a new international residential real estate franchise company using the Better Homes and Gardens® Real Estate brand name.
“We are very pleased to add Better Homes and Gardens Real Estate to our family of real estate companies, and we are equally proud to be entrusted by Meredith with the stewardship of this well-known and respected brand that is so deeply tied to the concept of owning and improving one’s home,” said Richard A. Smith, Realogy’s vice chairman and president. “Looking more broadly, this agreement demonstrates our confidence in the long-term strength of the housing market, particularly in the U.S., and the favorable demographic factors that will continue to drive homeownership and household growth during the years and decades to come.”
The licensing agreement between Realogy and Meredith is for a 50-year term, with a renewal option for another 50 years. Financial terms of the transaction were not disclosed, and the transaction is not expected to have an immediate material impact on Realogy’s financial results. Meredith will receive ongoing license fees based upon the royalties that Realogy earns from franchising the Better Homes and Gardens Real Estate brand. Meredith, owner of an 85-million name consumer database, will offer Realogy selected database services.
“Although this will be a start-up for us, it’s a brand that is recognized not only with the American consumer but also the real estate industry,” says Alex Perriello, president and CEO of the Realogy Franchise Group. “In that regard we feel fortunate to have this opportunity to license the brand and roll it out.”
Realogy plans a July 1, 2008 launch of the Better Homes and Gardens Real Estate franchise system and will engage in various pre-launch activities in the interim.
“We’ve got the first nine months to be putting the value proposition together, getting it ready to take it out to the market as a franchise offering. Our targets will be large- to mid-sized companies who are currently unaffiliated,” says Perriello. “The good news is that we have the expertise and infrastructure to support this growth. Once we get started it will be a very aggressive effort to talk to the unaffiliated companies and present them with the opportunity.”
“This is a tremendous opportunity to capitalize on the power of America’s leading consumer magazine brand on behalf of the world’s most successful real estate franchise company,” says Meredith President and Chief Executive Officer Stephen M. Lacy. “It fits extremely well with our strategic objective to further diversify our business by providing Meredith with significant sources of revenue not dependent on traditional advertising.”
“Better Homes and Gardens Real Estate is a highly strategic addition to Realogy’s premier portfolio of real estate franchise holdings, a brand that comes with well-established equity and one that we expect will compete well in the marketplace,” adds Smith.
The Better Homes and Gardens name has been a staple in American life ever since 1924 when Meredith first published the magazine under that masthead. Today, the magazine boasts a circulation of 7.6 million and a readership of nearly 40 million. In 1978, Meredith launched the former Better Homes and Gardens Real Estate service, which it owned and operated for 20 years, and grew the business into a highly respected name in the real estate industry. Meredith sold its real estate business in 1998 while retaining ownership of the Better Homes and Gardens Real Estate brand name.
Better Homes and Gardens Real Estate will become Realogy’s fifth residential real estate franchise brand and sixth overall. Today, Realogy owns the CENTURY 21®, Coldwell Banker® and ERA® residential real estate brands, along with a commercial real estate franchise system in Coldwell Banker Commercial®. Realogy also has a similar long-term licensing agreement with Sotheby’s Holdings, Inc. to license the Sotheby’s International Realty® name, a relationship that began in February 2004 and has grown to approximately 400 franchise and company-owned offices globally with more than 8,000 agents around the world.
“We have more than a decade of experience in managing world-class real estate brands that compete successfully in the local marketplace, and we also recognize that there is ample room for continued growth in the industry,” says Perriello. “We believe that there are substantial domestic and international growth opportunities in real estate franchising, and Better Homes and Gardens Real Estate will help us accelerate that growth.”
The National Association of Realtors® (NAR) 2006 Profile of Real Estate Firms reported that 77% of residential real estate brokerages and 45% of real estate agents are unaffiliated with any franchise. Furthermore, the same NAR survey showed the value of franchising in that 88% of real estate firms reported that their franchise affiliation improved their name recognition; 83% reported a beneficial impact on their ability to acquire listings; and 72% reported that their franchise affiliation contributed to an increase in profits.
“This announcement speaks volumes about our confidence in the long term real estate market,” says Perriello. “We didn’t look at this in a short term perspective-obviously there are cycles in our business, but this was a long term strategic decision to grow. This is what we’re going to look like 10 years from now.”
Meredith Corporation is one of the nation’s leading media and marketing companies with businesses centering on magazine and book publishing, television broadcasting, integrated marketing and interactive media. The Meredith Publishing Group features 25 subscription magazines – including Better Homes and Gardens, Ladies’ Home Journal, Family Circle, Parents, American Baby, Fitness and More – and publishes more than 200 special interest publications under approximately 80 titles. Meredith has more than 400 books in print. Meredith owns 13 television stations, including properties in top-25 markets Atlanta, Phoenix and Portland, OR. Meredith has an extensive online presence that includes more than 40 Web sites and two broadband channels – Better.tv and Parents.tv.
Realogy Corporation, a global provider of real estate and relocation services, has a diversified business model that includes real estate franchising, brokerage, relocation, and title and settlement services. Realogy’s world-renowned brands and business units include Better Homes and Gardens® Real Estate, CENTURY 21®, Coldwell Banker®, Coldwell Banker Commercial®, The Corcoran Group®, ERA®, Sotheby’s International Realty®, NRT Incorporated, Cartus and Title Resource Group. Headquartered in Parsippany, N.J., Realogy has approximately 15,000 employees worldwide. Realogy is owned by an affiliate of Apollo Management, L.P., a leading private equity and capital markets investor.