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The concept of Estate Agency Franchise although relatively new in Eire is more mature and common place in other jurisdictions or other nations significantly the United States.
The earliest sign of franchising in any sector dates back to the 1850′s with Isaac Singer the inventor of the Singer sewing machine. Throughout his seek for an effective and an affordable way to distribute his product for his company, the Singing Sewing Centre, Singer ran into issues that prevented his company from being successful. His first drawback was an absence of capital for manufacturing his machines. Secondly, no one was keen to buy his sewing machines with out first being taught how to use them, which required effort that almost all traditional retailers couldn’t provide. Singer’s solution was to charge licensing fees to business people who would own the rights to sell his machines in certain geographical areas. They would also be responsible for teaching customers how to use his machines, thereby creating gross sales opportunities. Other companies noticed this novel approach and modified this business model. Now there are franchise companies providing a plethora of services and products to customers and companies around the world. From “Bark Busters” a franchise to keep canines from barking and disturbing the neighbours to Crime Scene clean up!, the list keeps on growing.
An estate agency franchise is a contract or agreement where the Franchisor, the Owner and Developer of the franchise system licences, franchisees the use of trademarks, service marks, logos, or promoting owned or developed by the Franchisor. Some franchise methods are operated utilizing only the Franchisor’s brand name such as McDonald’s. In others the franchised brand is used in tandem with a trade name which the franchisee establishes. Examples in Ireland embrace Coldwell Banker Paul Doyle Estates.
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The widespread brand enables all individuals in the franchising system to profit from promoting and good will generated from the operation of every unit whether operated by franchisees or the franchisor. Since customers are brand driven, this larger, more recognised name created by common use of the franchise brand tends to drive clients to the franchised business.
Each successful franchise organisation includes a technique of doing business which is common to all franchisees and franchisor. The business methods in the true estate market often include methods of delivering services, standard signage, accounting methods, stock control and knowledge management. This systematic technique of doing business employs a function of franchising often known as “Speed to Market”, meaning a business can quickly develop their supply of services to customers since they repeat successful methods in every transaction.
Franchisors often levy an preliminary franchise price followed by month-to-month royalty and advertising fees. Sometimes in Ireland the initial franchise price is €20,000 to €35,000, on going royalty fees from 6% – 9% of gross revenue. There’s often minimum fees for the National Advertising Fund ranging from €3,000 every year to 2 half of % of gross revenue. Other fees could also be levied for the licence to the technology supplied, and ongoing training. This pooling of assets permits franchisees access to enterprise methods which are ordinarily the province a lot larger organisations.
Most estate agency organisations require franchisees to contribute to regional or national promoting funds and likewise to spend money promoting the brand locally. The advantages of cooperative promoting in franchise methods arise both from the increase variety of commercials that multiple contributors can buy, and likewise from professional promoting companies, market research, public relations, and all other support.
The franchisee is an independent operator with his own business. Franchisees operate their very own companies, are entitled to all profits which are generated, are responsible for paying their very own taxes and to their very own employees. In Ireland the majority of estate agency franchisees are conversions of current businesses rather than new start ups, (nevertheless that is altering in favour of start ups). This type of franchise occurs when the proprietor of an working estate agency workplace decides to affiliate or franchise to a franchise chain to reap the benefits of the brand and certain components of the working system. This can be a different kind of franchise relationship than is usually seen in the fast-food business where the enterprise owners don’t need to know anything about running a restaurant in order to operate the franchise.
In affiliation franchising thus far in Ireland, the franchisee is allowed to proceed utilizing a pre existing trade name along with the franchisors brand name. Conversion franchising or affiliation franchising is probably the most generally used in estate agency. The franchisor seeks active owner operators, believing that value is added to a franchise enterprise by having the motivation and entrepreneurial efforts of owner operators.
The development of ecommerce and the internet has resulted in the potential enhance in franchising. By way of the internet and intra nets, franchising companies are in a position to communicate faster and better with franchisees, suppliers and consumers. In case you own an estate agency is franchising best for you? That depends. Franchising is a business technique in which the parties share many interests, however not all. Both parties rely upon the efforts of the other for their very own success, however don’t necessarily succeed simply because their companion does. Franchising only thrives when each franchisor and franchisees achieve their objectives. Although it shares some attributes with a partnership, franchising just isn’t a real “partnership”. Nevertheless there are lots of benefits of franchising. For example, enterprise owners wouldn’t have to maintain a brand name or think about one of the best ways to operate their business. These elements are supplied by the franchisor which in turn permits franchisees to concentrate on increasing their business. The reputation that the brand conveys is instantly out there to the new franchisees.
Franchising is a business relationship and each relationship is personal. No two people who are approached will find the identical advantages or disadvantages of franchising. Many components will influence whether a franchise relationship is great, simply as many components influence whether any other personal or business relationship is good. And, as in any relationship, the benefits to the parties to a franchise relationship must, over the long term, out weigh any disadvantages, if the connection is to endure.
Expect no more than what the franchisor guarantees in writing in the franchise agreement. Affirm your understanding of these guarantees through conversations with current franchisees and question the franchisor. Be sure that the franchisor responds to the issues that concern you about its programme before you enter into any agreement.
After the franchise agreements have been signed, most estate agency franchisors will assist franchisees to develop or revise business plans. Training and orientation of the franchisors business methods might be delivered within the first few months to the supervisor/proprietor of the franchisee company and in cooperation with the supervisor/proprietor, training might be delivered to the sales brokers and administrative staff. Some estate agency franchisors also employ enterprise consultants to liaise with the franchisees on an ongoing basis to help them to develop, innovate and increase their market share.
One of the most valuable types of business consultation out there to estate agency franchisee arises from the connection one franchisee develops with other franchisees throughout the network. Whether they meet locally, regionally nationally or internationally franchisees in the same system develop a kinship and collegiality arising from the way in which they handle comparable problems. Most franchise organisations have formal and informal franchisee networks, within which franchisees are typically keen to share their experiences with their colleagues.
Most estate brokers in Ireland are so centered on each day operations that they have very little time to devote to research and development. Franchisors usually become aware of market trends and other developments if for no other motive than they operate in differing markets around the country or around the world and because they are active in business associations. Estate agency franchisors are often leaders of their industries and employ skilled workers whose job description contains finding methods to do things better. They naturally attract consultants and others with new merchandise and business ideas. This data is usually freely passed onto franchisees and often works its way into the business strategies of the franchise network.
On the reverse side, many franchisees usually give you new concepts on methods of doing business, which additionally they share with their colleagues and the franchisor. Actually, most franchise agreements require this sharing of concepts and information. Most franchise organisations test new concepts for merchandise with franchisees before “rolling them out” through the rest of the franchise organisation. This approach to innovation can usually avoid mistakes, although it does not dictate that each innovation or advertising and marketing plan might be successful.
Nevertheless, surely probably the most necessary benefits is the business resale opportunity also called the “exit strategy. At some point the owner of each enterprise wants to sell on or otherwise switch ownership of his or her business. The business which has a longtime reputation and brand name usually is attractive for purchasers by the franchisor, current franchisees, as well as by prospective franchisees. Because franchisors are commonly engaged in recruiting new franchisees additionally they may be able to identify someone who would reasonably spend money on an current enterprise rather than a new franchise business. Generally the franchisor in considering an initial public providing of its inventory may want to acquire a successful franchisees enterprise to make it a part of a public offer. This along with the truth that franchisees have contracts that provide support, access to business methods and a recognised brand name may enable franchisees to participate in and be paid a higher multiple of earnings than is likely to be paid if the business was sold other than as a part of a publicly traded company. There’s more likely to be a higher demand for a business that operates as a franchisee of a successful franchising company than there is for a small enterprise which has a single location and which is perceived to achieve success primarily because of the reputation and skills of the individual enterprise owner.
Franchising in estate agency is rising rapidly. In Ireland of the 1200 estate agencies round 470 are in franchise or quasi franchise groupings. Although only over 1/3 of the offices these teams have over 2/3 of the market share.
So if you are considering increasing your estate agency enterprise or organising then it’s best to consider franchising. We think it would even make your bank supervisor smile.
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