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How are franchises faring? NAR study digs into the numbers

09/24/2019

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Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.

Could brokers be abandoning the franchise model, electing instead to remain independent under their own flags?

That seems to be the case, if the numbers published in the September/October issue Realtor magazine are any guide.

The latest data from the National Association of Realtors (NAR) shows that only 11 percent of all brokerages were affiliated with a franchise company in 2019. That’s down slightly from 13 percent two years ago, as a writer for Realtor magazine noted in an article on working at a franchise.

The magazine says 42 percent of all Realtors — meaning that percentage of the NAR’s 1.2 million members who are agents and brokers — are now affiliated with a franchise. That’s down, albeit only slightly, from 43 percent two years ago.

The latest figures are always interesting to delve into because they offer a point of comparison for the industry. Everyone has their own metrics that they use to make their own business decisions and to reach their own goals. It’s in that spirit that NAR’s latest survey, the  Residential Franchise Report, might be of use as some sort of rough benchmark.

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For the study, the magazine polled 28 brands, from the oldest – Century 21, started 48 years ago — to the newest — Pink Realty, which launched last year.

The survey uses self-reported information by the companies themselves and has not been independently verified, either by NAR’s trade journal or Inman.

Gainers and losers Gains Keller Williams

Now back to our regularly scheduled program: In terms of agents, Keller Williams is No. 1 with 153,904. But in terms of offices, Keller Williams has just 825, which is only large enough to be ranked sixth in the nation.

The Austin, Texas-based outfit grew by 68 offices and 4,701 agents over the two-year period.

Berkshire Hathaway HomeServices

But the largest gains belong to Berkshire Hathaway HomeServices, which opened an additional 137 offices and landed an additional 6,521 agents under its banner. The company now has a total of 1,450 offices nationwide and 50,000 agents and brokers, according to the report.

RE/MAX

RE/MAX has the most offices of any franchiser, with 3,765. Century 21 has the second most, with 2,174, followed by Coldwell Banker Real Estate, with 2,165; Berkshire Hathaway with 1,450, and Keller Williams with 825.

Coldwell Banker/Realogy

But a closer look shows that Coldwell Banker, headquartered in Madison, New Jersey, lost 35 offices and 3,808 agents over the two years since the bi-annual survey was last conducted. And Century 21, also based in Madison and also under the publicly traded corporate parent Realogy Holdings Corp. along with Coldwell Banker, dropped 42 offices and 1,775 agents.

Exit Realty

Exit Realty took the biggest hit, though. It dropped 5,000 agents while adding 29 offices.

Losses

Despite losing offices, Coldwell Banker still has the second most agents at 85,192, followed by RE/MAX, 62,664. Century 21 has 53,571, and Berkshire Hathaway Home Services has 50,000.

Besides Berkshire Hathaway, other big gainers in terms of agents include RE/MAX with a net gain of 223; ERA Franchise Systems gained 711 and Engel & Volkers Americas gained 946 agents. Weichert Real Estate Affiliates lost 700 agents but added 23 offices.

The new kid

And what about the fledgling Pink Realty? The new kid on the block has eight offices with 66 agents. By the way, the name Pink has nothing to do with the women’s movement, though the Colorado Springs-based company’s CEO is Monica Breckenridge.

It’s just that pink is Breckenridge’s favorite color. She’s a skin cancer survivor, and she has a strong interest in funding breast cancer research. It’s also an easy-to-remember name, she’s said in the past.

Other metrics

The poll results, as printed in the magazine and online, also detail each chain’s franchise fee, on-going royalty fees, the length of the agreement between the local broker and the homes office, whether the contract is renewable and at what cost, and the monthly charge for advertising.

The initial franchise fees vary from $1,000 to as much as $35,000. Better Homes and Gardens Real Estate, Engels & Volkers, Keller Williams, the Nest Realty Group, RE/MAX and United Real Estate are among the ones charging the high end franchise fees. But agents can join Realty Executives for a mere $1,000.

Contracts range from as short as a year to up 10 years. Some – but not all – are renewable.

Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.

Source: click here

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