We operate in a profession famed for its thirst for “networking”. It’s our way of building and extending contacts to feed the never ending need for listings, the right buyers and an ongoing stream of referrals. As economic conditions erode, many independent agents may find themselves pondering whether they’d be better positioned to weather the global downturn backed by a nationally franchised brand.
As real estate agents, we understand the value of networks. The decision to join a major network or not, for some agents, is simple. For others, it’s a decision fraught with difficulty. For all parties concerned, it’s certainly a decision not made lightly!
When properly structured and well run, major network brands can provide benefits for both parties. However, jumping under the branding umbrella is not an easy route to riches for franchisees, nor is it a panacea for a failing business. Considering the implications of the contractual commitments when joining a network, compared with the isolation of independence, agents need to take a sobering look at their skill set as well as their ambitions and realistically assess their prospect of success under both models.
Franchises and Cooperatives in Australia emerged in a significant way in the early 1970’s, mainly under the influence of US fast food systems. Since then, growth in franchising has been nothing short of remarkable, developing and expanding to include virtually every product and service business and becoming a highly significant and dynamic segment of the economy. Between 2006 and 2008, for instance, franchises grew 14.6 per cent in Australia and many of these systems are home grown.
But is joining a network the right choice for you?
There’s a fascinating love/hate relationship that some agents have with their network and mentality plays a crucial role in determining happiness, should you choose that path. While some agents are perfectly suited to the more corporate approach of major brands, for others, it’s perceived as being restrictive, or even stifling. Yet, the alternative of independence, while certainly offering greater entrepreneurial freedom, sometimes exceeds the abilities of even super-salespeople. As agents embarking on a new business quickly discover, there’s much more to success in business than just sales.
The case for
One of the primary benefits offered by networks is training. Even if you consider yourself a thoroughly experienced agent, how effective are your business management and leadership skills? You’ll possibly need as much support in this arena as your staff will in order to hone their sales, property management and administration skills. How will you lift the skills of your employees and what’s your long-term strategy?
Networks allow you to own your own business with the benefit of assistance from the franchisor. You gain from using their well established name and reputation (brand identity). Even better, you can eliminate a lot of setting up expenses as the franchisor has researched and developed not only a range of products and services but also has buying power. This allows you to bypass the years involved in establishing the awareness of a new brand by leveraging off franchisor advertising and promotional activities on a national scale.
The chief advantage that networks bring to estate agency principals is, without doubt, the ability to call upon the expertise of corporate staff, while remaining self employed. This can greatly reduce risk. Additionally, there’s a team of operational field staff readily available to assist with problems.
There are other battlegrounds where networks hold significant advantages for franchisees, namely, technology. Networks of any substance deploy significant resources to develop proprietary technologies to put their agents ahead of competitors. A quality website can cost $10,000, just to get you started, then maintenance and regular updates come at additional cost. However, not so if you belong to a network. Networks tend to either absorb you into their website system or offer independent websites at vastly reduced costs.
Search engine optimisation (SEO) is another field that simply cannot be ignored. It’s wonderful to have a website that offers a sublime customer experience but it’s not effective if it appears on page three of Google’s search results. It’s top ten or bust these days and tomorrow will bring even greater challenges. SEO has a significant impact on your bottom line. Without experts working on your behalf, you risk sinking into oblivion.