RISMEDIA, May 5, 2010—In spite of the struggles of the past few years, real estate franchising is still a very viable alternative for many independent real estate brokerages. The industry continues to be a complicated, dysfunctional compilation of individuals, companies and large corporations trying to figure out what the brokerage business should look like three, five and 10 years from now.
Due to the sheer size of our industry, there are many opinions, models and personalities that attract independent real estate brokers into conversations about the future of their companies. As the market begins to stabilize in 2010 and 2011, those franchisors, national or regional, large or small, who can combine fresh, innovative, new “hooks” with solid tools, systems, technology and support will be successful in renewing existing franchisees and affiliating new ones.
The market is breaking down into three segments:
National players. The large, national brands will continue to be a force because of their brand recognition, size of their organizations, referral networks and ability to begin investing in R&D again in the near future so they can offer up new “hooks” that will be critical to their future success.
Regional players. The large, regional companies have an advantage because they are regionally owned. If they can combine that positioning with other “hooks,” solid support, tools, systems and technology worthy of some of the nationals, they can make a strong argument to an independent brokerage who believes an affiliation can help their business and would rather deal with a smaller, less corporate franchisor that is regionally vested. Intero Real Estate Services, whose chairman is Bob Moles, former president of Cendant’s Real Estate Franchise Group, has taken an old “hook” and given it a new twist. They are taking existing multi-office regional brokerages, selling them master franchises (like Century 21 and RE/MAX did in the early 1970s) and making them regional franchise players using the Intero “hooks” of innovation, coaching and technology in their franchise sales efforts.
Niche players. More and more niche players will surface to serve specific segments of the real estate brokerage community with their own unique “hooks.” There are several examples that prove this point:
• A new company called Pedal to Properties hopes to capitalize on a small but fiercely loyal segment of the brokerage industry that is environmentally and health conscious. They give customers bicycle tours of neighborhoods as a way to engage them.
• Due to the ever-increasing purchasing power of the Hispanic community, Casa Latino started selling franchises two years ago geared toward the Hispanic brokerage and agent or those who want to reach the Hispanic consumer.
The success or failure of these and other niche franchisors will be based on the support, tools, systems and technology they can offer beyond their “hooks.” As with the national and regional players, no matter how good the brand or “hook,” these franchisors must be able to justify the initial and ongoing fees by providing real value to their franchisees.
Jose Perez is the president of PCMS Consulting, a full service consulting, sales and management organization that specializes in real estate industry issues.