Investing in an estate agency franchise can be an appealing business opportunity but, like any investment, you will have to decide whether it’s the right thing for you & your situation. Here are some key points to consider:
The Pros of investing in an estate agency franchise
There are a number of advantages for those thinking of buying an estate agency franchise & becoming a franchisee. The main advantages are that you will be taking on a proven business model & will have less to worry about than those who are starting up a business for themselves. With 80% of new startups failing within 5 years, this can be a big plus for those who are looking to risk their own money & maximise their chances of success. The main advantages include:
Established Brand Recognition:
Investing in a franchise allows you to leverage the established brand name and reputation of the franchisor. This can attract customers more easily compared to starting an independent agency from scratch. Belvoir Group has 6 premium brands that either have strong national recognition or that are particularly well known in their region.
Proven Business Model:
Franchises offer a tried-and-tested business model. This can reduce the risk associated with starting a new business, as the operational procedures and strategies have been refined over time. Belvoir Group has hundreds of franchisees & have taken on over 100 new franchisees in the last 4 years.
Training and Support:
Franchisees typically receive comprehensive training and ongoing support from the franchisor. This includes assistance with marketing, operations, and management, which can be invaluable, especially for those new to the industry. Belvoir Group has industry-leading support & training for all roles within an estate & lettings agency business so that buyers of a property franchise do not have to worry about training staff in best practices.
Marketing and Advertising:
Franchisors often run national or regional marketing campaigns, which individual franchisees benefit from. This can reduce the marketing burden on the individual business owner. Belvoir Group’s brands each have a dedicated marketing team which provides support & marketing at a national & a local level.
Access to Technology and Systems:
Franchisors usually provide access to sophisticated technology and systems that would be costly to develop independently. This can include customer relationship management (CRM) software, listing platforms, and other digital tools.
Learn how to implement AI in your estate agency franchise.
Economies of Scale:
Franchisees may benefit from the franchisor’s buying power, gaining access to better deals on supplies, advertising rates, and other operational costs.
The Cons of investing in an estate agency franchise
Initial and Ongoing Fees:
Franchisees must pay an initial franchise fee and ongoing royalties or management fees, which can be a significant financial commitment. For many new franchisees, this works well, however, with significant resources being made available for those starting out in business. Done well, the resources developed by a business that has hundreds of franchisees are more valuable than the resources a business can develop or pay for by itself.
Lack of Flexibility:
Franchise agreements often come with strict operational guidelines and restrictions. This can limit the franchisee’s ability to make independent decisions or adapt to local market conditions.
Reputation Management:
The franchisee’s business is tied to the reputation of the overall brand. If the franchisor or other franchisees engage in practices that damage the brand’s reputation, it can negatively impact all franchisees. For many franchisees, this works the other way around, however, with the brand providing opportunities that other, smaller businesses just wouldn’t get.
Andrew Jack explains how the Belvoir brand helped him in this case study:
Dependency on Franchisor:
The success of the franchisee in a real estate franchise is closely tied to the performance and stability of the franchisor. If the franchisor faces financial difficulties or fails to innovate, it can adversely affect the franchisee’s business. The hope is that the whole is greater than the sum of its parts, however, and that by creating a mutually dependent relationship, each franchisee is part of a team with the same vision and that, for each piece of effort they put in, they will be rewarded by the efforts of the larger franchise team.
Limited Territory:
Franchise agreements typically grant rights to operate in a specific territory. This can limit the franchisee’s ability to expand beyond that area, even if there is potential for growth. In the estate agency business, this often works well with territories being defined around the size of territory that makes sense (not many people will use an estate or letting agent that isn’t local) & through supporting successful franchisees to take on additional territories.
Exit Challenges:
Selling a franchise can be more complicated than selling an independent business. The franchisor usually has to approve the sale, and the new owner must meet the franchisor’s qualifications. Belvoir Group has a dedicated team to help with this & to assist franchisees to find buyers. Although it can be more complicated, it doesn’t need to be & banks & investors are drawn to franchise businesses as a ‘safe bet’, making funding & opportunities more plentiful.
Investing in an estate agency franchise can be a lucrative opportunity, especially for those who prefer a structured business model with support and brand recognition. However, it’s essential to weigh the financial commitments, operational restrictions, and dependency on the franchisor against the potential benefits. Thorough due diligence, including understanding the franchise agreement in detail and assessing the franchisor’s track record, is crucial before making a decision.
If you are interested in the property industry and want to get started as an estate agent or a letting agent, the good news is that you can always partner with an industry leading franchise to help realise your personal and professional aspirations.
With the Belvoir Franchise Group at your side, offering extensive franchisee training and support, your journey on the road to working in the immovable property space will become a seamless experience.
To find out more about the opportunities we offer to become a franchisee with us, simply reach out and get in touch. Our friendly and approachable team is at your disposal, ready to assist in every way we can.
