The franchise model of estate agency has been around for decades, but it has never really been breaking news. It has always provided a quick way for agencies to grow their network, without stumping up all the cash, while providing ambitious agents with the chance to own a slice of a big pie with a more modest investment. Of course, there have been petty scandals along the way but never have there been more press headlines about franchising than now.
So what has changed? It appears the pandemic is the catalyst for the resurgence in the franchise business model and its modern counterpart, the self-employed agent. Chris Summers, Head of Franchising at Century 21 UK, recognises that some agents are beginning to self-evaluate their place in corporate agency, while others are being forced to reconsider their futures. “There is so much talent in the industry but due to the pandemic, it has been estimated some 28 per cent of those working in estate agencies were furloughed, with a number of established firms announcing the start of redundancy consultations in the last few months of 2020.”
We do expect to see a real mix going forward – agents who run their business from home, solely online and agents who continue to be successful with high footfall branches. Chris Summers, Head of Franchising, Century 21 UK.
Century 21 spotted an opportunity to ensure the market can retain the knowledge and skill of as many of those affected as possible and wanted to give them a viable option and pathway back into the industry. As a result, Century 21 has launched three new franchise models to support thousands of people working in the property sector. “Century 21 Flex, Solo and Max give property agents and entrepreneurs the choice and freedom to run their own agency how they wish to,” comments Chris, “whether it’s running an agency from the comfort of their own home, running a traditional high-street branch or a mix of both. The choice is theirs.”
Century 21’s new opportunities tap into the heightened awareness around personal wellbeing and work-life balance, with Chris highlighting how changing attitudes to working from home have given agents the confidence to switch up how, when and where they operate.
“We don’t believe this is the end of High Street estate agency but we do expect to see a real mix going forward – agents who run their business from home, solely online and agents who continue to be successful with high footfall branches.”
High Street – mainstay or mass exodus?
So that’s got the elephant in the room addressed early – the demise of the High Street. The well-documented struggle in our towns and cities raises the question: why should any prospective franchisee invest in an agency that trades on physical branches in 2021?
I don’t think it’s too risky to be a franchisee on the High Street in the future; I think a High Street branch is an opportunity… as shops become available at lower costs. Dominic Agace, Chief Executive Officer, Winkworth.
“I don’t think it’s too risky to be a franchisee on the High Street in the future,” says Dominic Agace, the Chief Executive of Winkworth, a brand that now has 100 franchised offices nationwide, including 60 in London. “I think a High Street branch is an opportunity. It has always been an expensive challenge, and in some places, too costly for an estate agency to get a good location on a prominent corner in the heart of the local neighbourhood. Now there are more opportunities as shops become available at lower costs – and planning rules relaxed to allow the change of use from retail to estate agency.”
It’s the concept of a brand that needs exploring when you’re talking about franchises. Winkworth is a familiar name and when asked whether a franchise’s value is actually in an established brand and a High Street presence, Dominic says they play an intrinsic part in success.
“Overall, I would still say an agency’s name, its reputation and a tangible manifestation are the biggest client draws. When Winkworth run annual customer surveys about their likes, dislikes, feelings towards us and how they know us as a brand, the High Street presence is always the number one reason cited for recognising the company. Brand, a High Street branch and a talented individual all go hand-in hand in generating the value of a franchise.”
A perfect case of keeping faith in the High street is Winkworth franchisee, Jamie Moore. He has opened three franchises in the past three years (Poringland, Hellesdon and Southwold), commenting that his customers love the fact he’s not an independent or a large corporate but somewhere in between.
Jamie also touches on the ‘network’ aspect of visible franchised brands, which plays to the strengths of the current ‘relocate for a better lifestyle’ market: “Customers like our ability to tap into the Winkworth network of 100 offices, knowing their property is reaching people relocating from London and elsewhere.”
Standalone… but with support
As well as a linked network of branches helping to facilitate sales and purchases, established franchises offer pooled guidance and shared knowledge that allows agents to make a branch investment with confidence. The perfect embodiment of this is seen at Hunters – with its 400+ branches, now part of The Property Franchise Group.
Hunters’ Franchise Director, Andy Bushell, comments that when an individual takes up a franchise they not only gain a brand, they gain a support system. “At Hunters, we have not only an estate agency operation in a box but one that incorporates the latest in technology and marketing.”
We have not only an estate agency operation in a box but one that incorporates the latest in technology and marketing. Hunters prides itself on its back office support systems. Andy Bushell, Franchise Director, Hunters.
Those in the Hunters franchise system receive everything they need to operate at the ‘coal face’. “Hunters prides itself on its numerous back office support systems that franchisees can lean on, whether that be our award-winning training academy that provides free, fully accredited, online and classroom courses, or our compliance and regulation guidance ensuring businesses are in-trading correctly. All Hunters franchise partners have access to our online ‘Hunters Members Area’ too, which is essentially an oracle of information all our franchise partners need to operate their business effectively.”
There’s also a central marketing fund for Hunters’ franchisees, which provides numerous advantages, especially in the complex field of digital marketing. “We even have a full-time digital marketing coordinator to manage this important area,” comments Andy.
High time for the hybrid
Andy’s acknowledgement of the importance of digital marketing leads nicely to the rise of the hybrid agent. Where it is pretty much mandatory for Hunters’ and Winkworth’s franchisees to have an office, other franchise agencies are honing the hybrid model to meld brand strength and proptech with self-employed status and a more transient type of operation. Describing itself on its website as an ‘agile, visionary and rebellious business’, Meyers in Dorset is big on brand but equally as prominent with its home-based working proposition. It’s a tantalising option for traditional agents, whose heads are being turned by a bold corporate identity in its geographical patch, existing awareness among home movers and a bigger slice of that pie.
Mark Meyers, the company’s CEO, says switching to a franchise model can be a good option for agents in tough times – perhaps an alternative to selling up and exiting the agency market completely. “A franchise can offer a resilient, low-cost, home-based option in challenging times,” comments Mark. “Traditional agents can use our franchise model to exit the High Street and remove the high overheads associated with physical locations.”
Traditional agents can use our franchise model to exit the High Street and remove the high overheads associated with physical locations. Mark Meyer, Chief Executive Officer, Meyers.
Agents thinking of investigating franchise or self-employed models are advised to get a granular level of detail before signing up. Elements to consider include:
- The commission structure: how much do you get to keep and is this affected by who sources the lead? Is the commission rate lower if the broker supplies the lead?
- Subscription fees: is there an annual fee and where does that go? Does it cover portal costs and fees to join trade associations or are those at your expense?
- Marketing: what support is on offer in terms of websites, digital marketing, social media, design and print?
- Support: is there a central administrative team that will help with sales progression and lead generation?
- Territories: will you only be allowed to operate in a set geographical area? Can you expand into other locations and if so, do you have to buy the right?
- Expansion prospects: is there the opportunity to become a ‘master’ franchisee with people below you? Could you eventually open a High Street branch if trading as an online-only agent?
- Exit strategy: do you have to buy your way out? Is there a clause that prevents you from working for another agent in the same area for a set number of months?
In the spotlight – self-employed agents
So far, so good. In terms of positioning, however, is there a difference between the traditional franchisee and the self-employed agent? “Hybrid, self-employed, broker – all these terms, in my opinion, refer to the restructuring of agency where the individual agent carries less listings; services movers with a personal, one-point- of-contact, end-to-end service; has greater earning potential, freedom from office presenteeism, and delivers a superior service.”
These are the thoughts of Ben Littlewood, the Co-Founder of Moveli – a London/Surrey borders agency that sets its stall out early, with ‘exceptional estate agents you’ll want to recommend’ as the opening gambit on its website – a nod to agents being recommended by advocates, and not brands pushed by branches.
Moveli’s home-based, self-employed agents are positioned as the stars of the show – they are the ‘local property experts’ that disruptive agency is so fond of. Ben even goes as far as saying that self-employed agents may not even need a brand.
As an individual agent, the best thing is you don’t need to build a hybrid brand very quickly in a saturated market. In the old days… you had to go it alone to start your agency and brand. Ben Littlewood, Co-founder, Moveli.
“As an individual agent, the best thing is you don’t need to build a hybrid brand very quickly in a saturated market. In the old days – and if you wanted to make more commission and be your own boss – you had to go it alone and start your own agency and brand,” says Ben. “Now, broker models give individual agents the benefits of going it alone without the downsides. They can focus on what they do best, work when, where and how they want, and keep the vast majority of the commission for themselves.”
Moveli is among a growing number of broker models where the commission rates are exceptionally high – usually higher than those offered in the traditional franchisee world, especially if there are High Street branches, support networks and stakeholders to fund.
Following in the way of the USA?
And on that point, it is good to remember that while there is no ‘i’ in team, it is all about the individual when you become a self-employed agent. If you’ve seen the film American Beauty, you’ll be familiar with Annette Bening’s character – realtor Carolyn Burnham – and her property viewing scene where she repeats her mantra of ‘I will sell this house today’. The vignette sums up the pressure felt by the sole operator, whose success rests almost exclusively on their own ability.
As the self-employed model drifts in from across the pond at a quickening pace, so does the notion of the realtor but are movers in the UK ready to buy into a person more than a brand? As illustrated by Moveli, emphasis is shifting towards the individual but perhaps we’re not ready for the all-out Annette Bening treatment just yet.
The realtor aspect is one that does resonate with Paul Clarke from self-employed agency model Mr & Mrs Clarke. “The US and Australian real estate industry set the seed for UK agents going solo with a ‘broker’,” says Paul. “There was definitely a pre-Covid revolution starting to build, where agents wanted flexibility away from the office and the ability to earn the majority of the fees they charged.”
There was definitely a pre-Covid revolution starting to build, where agents wanted flexibility away from the office and … to earn the majority of the fees they charged. Paul Clarke Co-founder and Managing Director, Clarke.
While we looked back to the film American Beauty, Paul uses Selling Sunset (TV show that follows LA realtors) as an example of how the US consumer is all about the person – and why UK movers may be skeptical of the ‘realtor’ concept.
Call for backup
“We have carried out extensive market research and found home sellers in the UK want a great estate agent backed up by a reputable brand,” adds Paul. For us, there is strength in the brand but the service is led by the individual. In the UK, clients like the wider support as well as the person, therefore we invest heavily in national brand awareness and our systems. It’s a potent mix that we believe in strongly.”
It’s clear that there isn’t really a lone wolf situation developing in agency. Broker models and full franchise networks still believe in the brand but are developing their offering to hand more control to individuals, with flexible ways of working, hybrid models for reduced overheads and improved commission rates. What is apparent, however, is a greater deal of self motivation, sales sparkle and dogged determination is needed – especially if agents want to earn the £100,000 a month they’ve read about…
SAAS SUPPORT FOR AN EVOLVING INDUSTRY
Gnomen is working alongside a number of leading franchises, including Century21, RE/MAX UK, Agent & Homes, J Brown and Mrs & Mrs Clarke, to provide the parent company or self-employed agent with SaaS (software as a service) plans. These contain many of the digital tools required to successfully run a franchise or MLS (multi listings service)-based network. With Gnomen, agents will benefit from:
- Franchise websites: fully branded and personalised micro sites that allow even the smallest of operations appear professional and comprehensive in the digital sphere. Features include listed properties, and ‘about us’, ‘find us’ and ‘contact us’ pages.
- Collaboration tool: a tailored way to share personal detail and accounts data with those involved in a franchise or network. Properties can be shared for cross selling but certain information can have restricted access and contact information is kept private.
- Client portal: provides movers with a safe, secure digital hub where they can check transaction progress, read viewing feedback, place and see offers, make payments, track sales progression, book viewings and find property alerts.
- Royalty reports: a tool that gives instant access to head office in order to track royalty commissions made on franchisees.