Real Estate Franchises with Better Business Models Attract Agents

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Real estate franchises are attracting increasing interest. The challenge lies in finding a franchise that offers an appropriate balance of risk and return in a market that is very sensitive to changing economic conditions. Franchises that anticipate franchisee needs and enable them to thrive in any conditions are rare. The right business model, tools, and incentives are critically important to franchisee success.

Veterans of the real estate business are seeking just the right franchise opportunity. These top agents are looking for a real estate franchise that breaks the mold and offers a truly innovative business model. Real estate entrepreneurs understand that franchising represents one of the strongest investment vehicles available today, and real estate franchises are especially enticing to long-time agents. By investing in their own real estate franchise, real estate entrepreneurs can dramatically increase their income, while managing it themselves and building equity. However, in a market that is increasingly sensitive to broader market conditions, the challenge for real estate investors lies in finding a real estate franchise that offers the right balance of risk and return.

The type of franchise is as important as the franchise concept. “Regional developer franchises,” which grant the investor the right to sell and market the real estate franchise in a given territory, are an ideal investment opportunity that should be given thoughtful scrutiny. Franchising allows franchise investors to be in business for themselves, just not by themselves. Franchisors provide a proven system of tools, procedures, and methodology that, if implemented as specified in the Franchise Operations Manual, will most likely lead to success.

When evaluating real estate franchises, it is important to consider whether the franchise is limited to a particular type of transaction or to certain kinds of properties. For instance, the effect of increasing interest rates is much more dramatic when the franchise system is designed for sales only, perhaps of a particular type of property. When rates rise, sales take longer, prices fall, and the pool of qualified buyers shrinks. This leads to an increase in the rental market as more people rent rather than buy real estate. Obviously, a franchise system that works within such limits suffers when conditions become less favorable in one sector of the real estate industry.

Franchises that anticipate, plan for, and devise a system to thrive in dynamic market conditions are rare, but Florida-based Rent 1 & Sale 1 Realty has created a franchise system that avoids the usual pitfalls of the average real estate franchise. Rent 1 & Sale 1 Realty franchises manage both sales and rentals, providing a built-in hedge against the effects of interest rate fluctuations. The business model offers franchisees the ability to succeed in any economic environment.

A real estate franchise should also provide the tools the franchisee needs, especially easy access to listings and the ability to track customers’ needs and interactions with the office. Finally, the royalties the franchisee pays should be structured so that the franchisee is not discouraged by a constant and never-ending drain on profits “off the top.” Rent 1 & Sale 1 Realty caps the royalties that franchisees pay, greatly motivating them to hit the cap and keep more their money. Since royalty fees are usually passed on to associates in the franchise, the limited obligation passes incentives along to agents as well.

In addition, agents establish themselves more quickly in their communities by providing both kinds of service across all kinds of properties. The franchise attracts top quality agents faster because of the variety of business the agent is able to pursue. Rent 1 & Sale 1 Realty also provides its franchisees with proprietary software to track customer volumes and listings, in addition to numerous databases that supplement MLS listings.

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Dan Gallien
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