COMMENT
If you don’t learn in a difficult market you’ll never learn,” agrees Simon Oldfield, Franchise Operations Director for Reeds Rains
I
n a recent article in PROPERTYdrum, the good and the ‘supposed’ bad of estate agency franchising was highlighted. It was an interesting read,
but for those thinking of becoming a franchisee, it’s worth considering what they should and shouldn’t, expect from the outset. As for any franchisee, it’s about feeling confident in setting up your own business, knowing you have the support of a good franchisor who has experience of operating in all markets.
THINK ABOUT YOUR FINANCES EARLY The franchisor is there not just to launch the business but also to ‘support you’ until the first income comes in. There’s the initial franchise fee and a monthly management service fee, often a percentage of gross revenues. This can be 10 per cent (Reeds Rains is 8 per cent). Make sure too, that you have contingency funds just in case, for example, pipeline sales fail to complete as anticipated. Don’t, however, expect financial support
from your franchisor – it’s not industry practice. Some do, however, offer opportunities to save money. Being part of LSL Property Services plc means Reeds Rains franchisees can benefit from economies of scale; LSL has negotiated special rates for advertising, property portals, audio tours and floorplans. It can reduce costs by up to two thirds and is something those ‘going it alone’ don’t have.
UNDERSTANDING THE KEYS Understand the key result numbers, conversions and ratios. Know what the figures mean so you can plan your business strategy and set appropriate targets. A good franchisor should talk honestly about what you should expect and be realistic about the highs and lows of a franchise. It’s not in anyone’s interest to ignore the facts;
26 OCTOBER 2011 PROPERTYdrum To further enhance your services make
sure your staff are the best locally and consider retaining a commercial agent to help to find premises – it’s one of the biggest issues new franchisees encounters.
ultimately it’s not just the franchisee that could lose out but the franchisor – whose credibility may be damaged. Success will also depend on the systems
and processes to support you and, of course, the reputation of your franchisor – amongst existing franchisees and in the industry. At Reeds Rains we have the benefit of industry leading spokespeople and teams across the country who understand the market inside and out and can advise franchisees accordingly. It’s invaluable for business planning, presents great promotional opportunities and again it’s something a sole agent in a single location simply doesn’t have. Good franchisors provide good IT
systems and processes but also marketing, legal, HR, and a support framework too including training and networking opportunities. Try to attend them all.
ENHANCING YOUR OFFERING Consider additional income opportunities. Many franchisees introduce financial services and lettings to enhance their customer proposition. Make sure your franchisor can help you to understand regulatory requirements and offer ongoing advice re money laundering, consumer credit licensing etc. A Reeds Rains franchisee only has to help book mortgage appointments to reap the rewards in commission payments; the advisers are employed by the company.
THE DOWNSIDES? There are few provided you get the right franchisor. You’ll have to abide by the rules of branding and general business procedures but ultimately a franchise helps you to launch and manage your own business, as you want to yet without the vulnerability of going it alone.
Reeds Rains franchisee, Paul Rodgers comments: “I wanted to own a business and as I’d worked for Reeds Rains previously it seemed a natural progression. There’s no denying it’s been hard, but with my business partner Lawrie Stewart we’ve been grateful for the support of Reeds Rains. We have a great relationship with our franchise operations director who regularly visits but is not breathing down our necks. He respects my experience and our desire to run the business as we wish. “The established branding, subsidies, training, systems and general advice we get is great but we are not expecting financial support – they are not there to bail us out. It’s our business, our responsibility and ultimately it’s our success – we’ve just opened our third branch and it feels great. We couldn’t have done it ourselves – franchising provided the ideal solution and we’re very pleased we did it. It’s been hard but, as my account manager says, ‘If you don’t learn in a difficult market – you’ll never learn.’ And I, for one, am a better agent for that.”
Any views you’d like to express on this?
www.propertydrum.com/articles/franchises
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