Franchise vs Independent Real Estate Brokerage.
If you’re thinking of starting a real estate brokerage, you may be wondering if it’s better to franchise or go independent. There are pros and cons to both options, and the best choice for you will depend on your specific business goals and needs.
In this blog post, we’ll take a look at the differences between franchising and going independent, so you can make an informed decision about which is right for you. We will also be taking a look at the difference between joining a franchise or independent brokerage as an agent and the pros and cons of each.
If you want to learn more about how you can get access to a global real estate brand and its tools and resources for only $85 a month with no franchise or royalty fees, click below to book a private one-on-one call today!
Opening a Franchise vs Independent Real Estate Brokerage for Brokers
The decision of whether to buy a franchise brokerage or open an independent real estate brokerage is one that all real estate brokers must make. There are pros and cons to each option, and the ultimate decision depends on the individual broker’s goals and preferences. Buying a franchise gives brokers the benefit of being part of an established brand with a proven track record.
However, it also means that they must adhere to the franchise’s systems and procedures. Opening an independent brokerage gives brokers more control over their business, but it also means that they are starting from scratch in terms of building a brand. Ultimately, the decision of which path to take is a personal one, and there is no wrong answer.
What is a franchise real estate brokerage and what are the benefits of purchasing one over starting an independent brokerage firm?
If you’re not familiar with franchises, they are businesses that operate under an established name and usually follow a specific business model.
Franchises can be a good option for brokers who want to start their own business but don’t want to go through the hassle of starting from scratch.
A franchise real estate brokerage is a company that is affiliated with a larger real estate franchise such as Re/Max, Century 21, and Keller Williams. The benefits of purchasing a franchise real estate brokerage include access to the franchise’s resources, brand recognition, and marketing support.
Independent brokerages may have more flexibility in how they operate, but they also have to start from scratch in terms of branding and marketing. Franchise real estate brokerages provide a turnkey solution for those looking to open a real estate brokerage, which is their main selling point to potential real estate brokers. While there is an initial investment required to purchase a franchise, many brokers choose to invest in a franchise to get access to their business systems, marketing, training, and agent recruiting tools.
What are some things to consider when signing a franchise agreement with a real estate company?
When signing a franchise agreement with a real estate company, there are several things to keep in mind. First and foremost, it is important to make sure that you thoroughly read and understand the contract. Pay special attention to any clauses or provisions that you do not fully understand; if necessary, consult with an attorney before signing.
It is also important to be aware of your rights and obligations under the agreement. Be sure to ask questions if there is anything you are unsure about. Furthermore, it is advisable to have a clear understanding of the company’s business model and how it will affect your own business.
Finally, make sure you are comfortable with the terms of the agreement and that you are confident in the company’s ability to deliver on its promises. Most of the time, franchise agreements for real estate brokers are binding for 5-20 years with a renewal clause.
Here are some potential questions for you to consider before you make a decision to sign an agreement with a real estate brokerage franchise.
What are the costs associated with starting up a franchise real estate brokerage?
Starting up a franchise real estate brokerage can be a significant investment. First, there are the costs of the franchise fee and initial franchise training. Then, there are ongoing costs such as marketing and royalty fees.
In addition, franchisees will need to maintain a certain level of inventory of marketing materials, which can be costly and add up to your monthly expenses.
Finally, franchisees may need to purchase or lease office space, which is usually the biggest expense on a real estate brokerage owner’s monthly expense sheet.
How much control do you have over your business as a franchise owner?
When you become a franchise owner, you are given a certain degree of control over your business. For example, you are typically able to choose the location of your franchise. You may also have some input into the design of your storefront and the layout of your office space.
However, there are some aspects of your business that will be governed by the franchisor. For example, you will likely be required to use the franchisor’s approved suppliers for any marketing material and business tools that you can offer to your agents such as an agent website, CRM, or even prospecting tools, and you may be limited in how you can advertise or market your business.
What are some of the challenges faced by franchise real estate brokerages?
One of the biggest challenges faced by franchise real estate brokerages is recruiting experienced agents. Since franchises are often national or regional brands, they can have a difficult time attracting top talent who may already be associated with a local company.
In addition, franchise real estate brokerages often have stricter marketing rules and procedures that agents must follow, which can be a turnoff for some experienced agents who are doing a lot of production on their own efforts.
Another challenge faced by franchise real estate brokerages is managing brand consistency. With multiple locations and agents, it can be difficult to ensure that everyone is adhering to the same standards and providing the same level of service.
Finally, franchise real estate brokerages often have high fees and royalties, which can eat into agents’ commissions and make it difficult for them to compete with independent brokerages.
Because franchise brokerages cost more to start and run than independent brokerages, agents are usually charged higher monthly fees by the broker and receive a lower commission split. On top of that, most franchise royalties are actually pushed on to the agents to pay by the broker as an additional percentage of their commissions for each closing, usually 6% of all closings.
How much money can you expect to make as a franchise broker?
When it comes to owning a franchise real estate brokerage, there are a few things to consider in terms of potential earnings.
First, the size of the franchise will have an impact on profits. A small franchise is likely to generate less revenue than a large one.
Additionally, the location of the franchise is also important. A brokerage in a bustling city is likely to see more business than one in a rural area.
Finally, the volume and experience of the brokerages’ agents will play a role in how much money the business brings in. Agents with years of experience are likely to be more successful than those who are just starting out. All of these factors should be taken into consideration when estimating earnings as the owner of a franchise real estate brokerage.
Generally speaking, however, most franchise brokerage owners with brokerages of up to 100 agents actually only make around $25,000 a year in profits after all costs have been accounted for.
If you want to learn more about how you can get access to a global real estate brand and its tools and resources for only $85 a month with no franchise or royalty fees, click below to book a private one-on-one call today!
What are the benefits of owning an independent real estate brokerage over purchasing a franchise brokerage?
While there are some benefits to purchasing a franchise, such as name recognition and access to proven business models, there are also several advantages to starting an independent brokerage.
Perhaps most importantly, owning an independent brokerage gives you complete control over your business. You can set your own commission structure, choose your own marketing strategy, and hire the agents that you think will be the best fit for your company. In addition, you won’t have to pay any royalties or franchise fees, which can add up to considerable savings over time.
Many real estate brokers choose to start independent real estate brokers over purchasing franchise brokerages because they do not have to pay the upfront franchise investment fee that is required to start a franchise office.
Independent brokerages also have the potential to be more profitable than franchise firms, since they do not have to share their commissions with the franchisor.
As you can see, there are many good reasons to start an independent real estate brokerage as well.
Of course, starting an independent brokerage comes with its own set of risks and challenges. Without the support of a franchisor, you’ll be responsible for all aspects of your business, from marketing to agent recruiting.
This is the main reason why many brokers will invest in a real estate franchise rather than start their own independent brokerage even if they do have to put up a much larger upfront investment and pay royalties to their franchisors each month from their revenue.
The Solution for Independent Real Estate Brokerages
Many owners of independent real estate brokerages or those looking to start their own brokerage are looking for ways to plug into a system with proven business tools, systems, assets, and resources that they can use to run, scale, and automate their business without having to pay big franchise fees or monthly franchise royalty costs.
One solution for these brokers is to actually partner their current brokerage with another independent real estate brokerage without losing their current branding, systems, marketing freedom, and culture.
Specifically speaking, many independent real estate brokerages today are choosing to partner with the largest independent real estate brokerage in the world, eXp Realty to get access to franchise-level business systems without paying franchise levels expenses.
In 2021 alone, over 600 independent real estate brokerages partnered their entire brokerage with eXp Realty to take advantage of eXp’s state of the art business platforms and get access to:
Lead generation websites and CRMs through KVcore
Transactions management software
Internal communications and referral sharing tools
The real estate metaverse with over 1000 paid employees and support staff members
Over 80 hours a week of training done by top agents around the world
The best agent recruiting and retention system in the real estate industry through equity awards and revenue share
All for only $85 a month at the broker’s expense, no franchise fees, no royalty fees, and no upfront investments. And the best part is? You get to keep your current branding, brokerage name, and the freedom to market your team however you like without being forced to play by a franchisor’s rules.
If you want to learn more about how you can get access to a global real estate brand and its tools and resources for only $85 a month with no franchise or royalty fees, click below to book a private one-on-one call today!
What are the pros and cons of working with a franchise or independent real estate broker as an agent or team leader, and which one is right for you?
Now that we have discussed in detail the differences between owning a franchise real estate brokerage vs an independent real estate brokerage as a broker-owner, I want to use this next section to discuss and share with you some of the differences between working with a franchise or independent brokerage from an agent or team leader’s perspective and the pros and cons of each.
One of the first decisions you’ll need to make when starting your real estate career is whether to join an established franchise or work with an independent broker so it is important that you know the differences of working with each and how they can benefit you and your business
The benefits of working with a franchise broker
One of the advantages of working with a franchise is that you’ll have access to a well-known brand name. You’ll also benefit from the resources and support of a large company.
However, franchises typically charge higher fees than independents, so you’ll need to generate more sales to achieve the same level of income.
If you’re looking for more control over your business, an independent broker may be a better fit. You’ll be able to keep more of your commissions, but you’ll also be responsible for generating your own leads.
One of the biggest misconceptions of agents when talking about franchise brokerages is that the brand will help them attract clients. Although in some cases, clients do consider what broker their agent is from and which office they work at, most of the time it is up to the agent to actually market themselves and find clients through their own personal branding.
In multiple exit polls done with buyers and sellers, consumers rank national brand or brokerage as the 2 least important factors when it comes to choosing an agent to work with.
To be more blunt, clients will always work with a specific agent over their company almost every time if they had to choose. So the idea that agents can get more clients by being with a franchise brand is completely false.
What a franchise brokerage can help agents and teams with is providing them with exclusive backend business tools and systems to run their business back offices such as CRMs, customizable agent websites with an IDX to their MLS, transaction management, and support teams.
The advantages of working with an independent broker
Independent brokers typically have lower fees than franchises, so you can keep more of your commission. You’ll also have more control over your business, and you may be able to negotiate a higher split.
However, you’ll be responsible for generating your own leads and may also need to invest in and set up your own business back office.
Since most independent brokerages are smaller operations, they might not be able to offer all of their agents the same systems, CRM tools, website builders, and a large team of support staff. And because they do not have a large network of agents to pull from, independent brokerages can only offer their agents training that is limited to the knowledge of the broker-owners and the agents at their brokerage.
If you’re just starting out in your real estate career, working with an independent broker can give you the opportunity to learn the ropes without paying high fees. You’ll also have more control over your business, and you may be able to negotiate a higher split. However, you’ll be responsible for setting up the backside of your business as well as be more of a “self-starter” in picking a marketing and sales strategy that works for you.
How to decide which type of broker is right for you and how to get the best of both worlds
Deciding on which type of brokerage that you want to work with as an agent is a personal decision and is based on what you are looking for in a brokerage.
Some agents prefer the support of working with established franchises while others like the lower fees and more freedom that independent brokerages provide.
The best way to decide which type of brokerage is right for you is to interview several brokerages, ask around to other agents, and get a feel for what is important to you in a brokerage.
Luckily for agents today, they can get the best of both worlds and get the systems, training, resources, network, and tools of a large global real estate brand without having to pay franchise fees, higher splits, or give up the freedom they have to run their business however they want.
Just in the same way that eXp Realty is able to offer all of these things to a real estate broker, they also offer the same things to a real estate agent or team as well. Because every agent at eXp Realty has access to the same tools, systems, and opportunities, an agent can benefit in the same way that a real estate broker can and get franchise-level business tools and support without the additional fees and restrictions.
If you want to learn more about how you can get access to a global real estate brand and its tools and resources for only $85 a month with no franchise or royalty fees, click below to book a private one-on-one call today!
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