The franchise is here to stay. The benefits derived from joining a franchise are many: affiliation with a larger organization; greater market power of a recognized brand; advertising and cooperative marketing. By contrast, independent business owners are only known in their local area, are not associated with a larger group, and do not benefit from the economies of scale of cooperative marketing efforts.

However, joining a franchise comes with some risks. Depending on the franchise, the upfront costs resulting from initial franchise fees and conversion can be expensive. Most franchise systems also require ongoing payments as a percentage of gross receipts received, called royalties. These fees can vary depending on the franchise and are usually around six or eight percent. Some traditional franchises also require flat monthly fees or transaction fees. Franchise companies audit their franchisees to monitor fee payments. The prospective franchisee must consider all of these costs and determine if the franchise route is the way to go.

Franchising in the real estate industry has been around for many years. Franchisors like Century 21, Coldwell Banker and Prudential to name a few. These are traditional companies that have maintained the operation of the franchise as when the concept was first raised. Primarily, you pay an initial franchise fee to join the system and pay a royalty to the franchise company on an ongoing basis. In return, he runs his business under our brand.

The real estate industry has changed, and the needs of realtors are changing as well. Realtors looking to become a franchise have other, more current franchise methods available to suit their needs. There are now franchise companies that offer a “no frills” approach to franchise affiliation. Since real estate is a service-oriented profession, with no actual product being sold, such as hamburgers or gasoline, these new systems offer branding and therefore the franchisee gains the benefit of being a member of a larger group. .

This “no frills” approach is catching the interest of many veteran brokers as they are gaining greater recognition in the marketplace without the burden of paying royalties. Many services that were available through traditional franchises, such as sales training, are offered by outside training organizations and schools, available at the brokers’ discretion. And the success of the real estate office is mainly due to the experience and management of the broker, not the franchise. That is why no franchise company will guarantee success by joining their franchise system.

As the real estate profession develops, the way franchises are also changing. Some may still opt for traditional franchise methods; however, a growing number of independent minded brokers are now realizing that joining a network will increase their recognition in the marketplace and are instead opting for the more current methods of franchise membership, without the burden of a higher cost.