To affiliate or not to affiliate
What Franchise Is Right for You?
There’s not one right answer to whether a franchise will help grow your business.

BY MARTIN SINDERMAN

Look beneath the surface
Gain benefits you can’t afford
Get backing for expansion
Select a forward thinker
Get help to get started
Going it alone

Wondering if affiliating with a particular franchise is the way to take your brokerage to the next level?

Deciding whether or not to go the franchise route--and after that, which of the 20-or-so major real estate franchises to sign on with--can be a couple of the toughest calls a broker/owner has to make. So take your time. Make sure you know exactly what it is you’re looking for, and exactly what your possible franchise options will really offer you.

Look beneath the surface
“If you wind up going with a franchise based solely on the razzle-dazzle stuff they present you with at the beginning, you’ll live to regret it,” says Richard Dallow, whose Levittown, N.Y.-based brokerage is affiliated with Weichert, REALTORS®. And given that most franchise agreements run five to ten years in length, he adds, you’ll have an awfully long time to do just that.

Dissatisfied with the recruitment and training support he’d gotten through his previous franchise affiliation, Dallow signed on with Weichert early this year after making very sure its culture didn’t clash with that of his own business.

“A culture match is very important in a franchise relationship,” notes Dallow. And the only way to evaluate this is to check the franchise out thoroughly. Go to the franchisor’s offices, talk with several representatives, and try to evaluate what the company’s core values are and whether or not they fit with yours, counsels Dallow.

Dallow also advises broker/owners to have a competent attorney review any franchise agreement they are considering. “It’s too big a decision, too big a commitment, and too big an expense not to do this,” he says.

Gain benefits you can’t afford
HER Kinney Properties Inc. broker/owner Nancy Kinney decided to affiliate her two-office/20-associate operation in Marion, Ohio, with a franchise in order to gain the benefits of computer-based listing and marketing technology.

“We were a smaller, independent company in 1998,” recounts Kinney, “and I felt we needed to bring on more modern computer tools to help us increase our listing inventory and sales.”

But in the course of preparing her business plan, it became clear to Kinney that she would have to spend a lot more to develop these tools in-house than through a franchise. So Kinney began to look at her franchise options.

Since she was looking for a high-tech company, the high-tech response from regional franchisor HER, REALTORS® (which merged with Huff Realty Inc. and Realty One to form Real Living Inc. in 2002) got her attention.

“I inquired via e-mail about franchise affiliation with two nationals and two regionals, and only one, HER, responded within 24 hours,” recounts Kinney.

Kinney also investigated the benefit versus cost equation of the transaction fees charged by national and regional franchises.

“I found that the norm for the nationals was 8 percent off the top (of transaction value), which amounted to an extra 2 percent for national advertising over and above the regionals,” says Kinney. Feeling that national advertising was of little value to her business, “I concluded I could spend those extra dollars locally and get a lot more for them.”

Kinney also says “it is essential that your sales associates see the value of the franchise.” Kinney worked to get associates' buy-in first by sharing her vision of how technology was changing the way homes were bought and sold. After associates reached a consensus that they wanted more technology, they were able to evaluate for themselves that the franchise offering was a match for what they needed, says Kinney.

Happy with what she’s gotten from HER (“They are customer-service oriented, and I like that”), Kinney advises those contemplating franchise affiliation to look closely at the value of what they will be getting for their money. “Overall, the most important thing is to put together a strong business plan--and find a franchise that can help you meet it."

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