Yesterday in EYE, Paul Smith wrote that anyone considering working for an estate agency franchise “must need their head examining”.
Obviously, as CEO of The Property Franchise Group, I completely disagree with the CEO of Spicerhaart.
Of the 22,000 estate agents and letting agents in the UK, there are only a handful listed on the Stock Exchange – just nine.
Of these, three run pure franchise models (The Property Franchise Group, Winkworth and Belvoir) and three operate partial franchise models (Hunters, LSL and Purplebricks).
Franchising is clearly the dominant business model if you want to get to the top tier.
Why is that?
In my view it is because franchising funnels the energy and drive of an owner/manager/franchisee into a recognised brand and the infrastructure of a bigger business.
Let’s take two examples from within my own business:
Acquisitions
Probably many EYE readers would like to add to their tenanted managed portfolio, but it is a daunting prospect if you have never acquired a lettings business before.
You can ask the neighbours if they want to sell but they might not confide in you.
You can register with business brokers but where do you get advice on goodwill versus share sale?
Has your friendly solicitor ever drawn up a sale and purchase agreement, with the relevant warranties and protections?
Your bank manager says he/she is supportive, but has no authority.
Instead, the decision will be made by a mysterious entity called “underwriting”.
You would soon find they don’t take calls, will only lend you 60% and want security over your home.
In our group we have a retained broker, Watson Stanley, a panel of solicitors, a pre-approved sale and purchase agreement, a funding partner who can get 100% funding decisions in 48-hours, a team who help with due diligence, and step-by-step support on post-acquisition activity including data transfers.
Oh and the franchisor (that’s us, at head office) pays “cashback” of 18-months of royalties to say “thank you” for building the brand.
EweMove
This is best described as a business in a box, if the box contains a laptop.
An experienced agent can operate without high street premises and has the benefits of a highly optimised website and marketing strategy (feed it £2,000 per month and receive 41 leads, ten of which you will be instructed on).
It features an automated lead nurturing campaign and a 24/7 manned call centre which handles your new business leads while you eat, sleep or work on the business you have in hand.
Like it or loathe it, EweMove is a distinctive brand which is the most trusted estate agent on Trustpilot.
It offers bank grade valuation reports to support you listing properties at the right price, which means that we have some of the lowest price reduction and withdrawal ratios in the industry and we sell 73% of everything we list, on a no sale, no fee basis.
Start up cost? £2,000 for the franchise licence, website and starter pack. And your £1,000 monthly licence fee includes the call centre, operating software, plus advertising all your properties on Rightmove and Zoopla.
That is incredible value for money, only made possible because it’s a franchise.
And so?
So I do disagree with Paul Smith.
You would need to see a psychiatrist to start up on your own in the 21st century.
Comments (19)
There is a place for all models
Some people need a hand from experienced advisors/mentors etc
A sensible low cost franchise or license solution may be attractive to all of those underpaid over worked PB bods who would like to jump ship for example
The “experts” at Purplebricks are franchisees already, if they take £200 per instruction of a £1000 average fee they’re simply paying a franchise fee of 80% where the going rate is normally about 10%. Genius!
Bruce’s Bonus for Conveyancing referrals too maybe
‘This is best described as a business in a box’. More like a Pig in a Poke….
My helicopter view from outside as a service supplier, early days of MAC some of the franchisees were questionable but those days are long, long gone. There was a massive tightening of standards from 2000 onwards. Belvoir never ever nothing but good, same with Winkworth.
Those new to the industry taking the franchise route will be guided, supported and nurtured into a business appropriate to their abilities and ambitions. Far more so than anyone attempting to from scratch enter the industry.
Of Ewemove, I see that as a solid transition from experienced agency into own agency operation, it is the closest thing to hybrid estate agency I can see.
Franchises for estate agency are a waste of time in MY opinion.
I believe EA to be very personal and every great agent will bring something new to the table.
Each Area has it’s own style of working.
Giving a fifth of your turnover away is just day light robbery.
I know Belvoir opened in West London twice in the same area and closed shop within 18 months.
The ones which are just about surviving are the ones which were already established businesses then were taken over like some Bairstoves to Hunters offices.
What utter rubbish is he spouting…..”if you want to get to the top tier then franchising is clearly dominant”
This guy is a monopolising prat. All they care about is themselves. Of course you’ll get to the top quicker and be able to float on the stock market as you take advantage of the poor investors at the bottom, many of which fail and close.
What are your franchisee success rates? How many close within the first year or so? How many actually have experience and can actually provide the service they are promising off the back of the top tier advertising??
I say this from experience…I stupidly bought a franchise to run along side a successful management and lettings business. I closed it due to the failings of the franchisor. Money grabbers.
Get a grip….if you want to make a quick buck and don’t care about the service levels at the bottom, become a franchisor and run that model, if you want to do it properly, don’t try to reinvent the wheel….just open a traditional after gaining the experience and provide the service everyone wants.
Don’t forget we are the most untrustworthy trade in the UK (according to yesterday news) these lot are the reason why….no experience (as they all state on their website “no experience necessary”)
So Ian Wilson examples of franchises arent exactly all stellar! Struggling business not making any sort of decent income for those who put their hand in pocket and bought said franchise. The only thing that works in this business model full/part franchise is that those at the top are raking it in, those at the bottom are not.
Interesting that he see PB as a part franchise though?
Ian, on the Ewemove brand what protections do I get as landlord from your *group* if things go wrong?
Where is the £2,000 per month spent to generate 41 vendor leads, of which you will get 10 instructions?
Ian’s last line spoils his objective response to Paul Smiths article.
You could still succeed with the right team in the right place doing the job properly.
You lost me at the Trustpilot reference, perversely I now see multiple five star reviews as suspicious, and the more gushing they are the more they fail the smell test.
Agree, pretty much every review site is dubious, the only one I trust to a degree is TripAdvisor because you can see all the reviews made by the reviewer
Ditto
Agreed, Trustpilot reviews are managed, meaning no bad ones. Any consumer is now well aware of this. The only reviews worth considering are Google reviews which, in my experience are on the whole genuine. Anything too gushy is either fake or paid for.
So Ian, how much do you pay Trustpilot each month?
None of the reviews sites can compete – for visibility or credibility – with Google. Just about the only reason any agency would use them is for the reasons alluded to above.
The recent reports in the National Press relating to holiday insurance just serve to further undermine the public’s confidence in sites like these.
We suggest all our potential clients disregard any reviews from such sites (and they welcome that advice).
EWEMOVE Well just quickly looking through ZPL a few minutes ago at your franchisees current sales listings 40 of them have 10 or less instructions Either they are not converting the leads from Head Office or they are not receiving enough enquiries.Which is It ? Perhaps the public get a little confused between Ewemove and Emoov ?
I used EveMove for a “tenant find” a few years ago, it was the best experience I have ever had with an agent, as I was only dealing with one person who at any point in to time only had a few active properties they were marketing.
Remember at a 60% sale rate, it does not take many properties per month for someone with low overheads (and no office) to make a nice living.
However no matter how good the service element is the franchisee is reliant on being fed leads to convert to instructions and then sales. Some of those 40 have less than 5
My experience with them was slightly different They are not transparent about their fee scales and when asked on their chat line were very evasive .The best I got out of them was between 1 and 1,5% not very competitive
It sounded very much like fees vary in accordance with seller’s attitude!