Franchising In Real Estate

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The idea of Estate Agency Franchise although relatively new in Eire is very mature and common place in other jurisdictions or other nations notably the United States.

The earliest sign of franchising in any sector dates back to the 1850's with Isaac Singer the inventor of the Singer sewing machine. Throughout his search for an effective and an affordable way to distribute his product for his firm, the Singing Sewing Centre, Singer bumped into problems that prevented his firm from being successful. His first downside was a lack of capital for manufacturing his machines. Secondly, nobody was willing to purchase his sewing machines without first being taught how to use them, which required effort that almost all conventional retailers could not provide. Singer's solution was to charge licensing fees to business individuals who would own the rights to sell his machines in certain geographical areas. They would also be responsible for educating customers how to use his machines, thereby creating sales opportunities. Other corporations seen this novel method and modified this business model. Now there are franchise corporations offering a plethora of products and services to consumers and businesses across the world. From "Bark Busters" a franchise to keep canines from barking and disturbing the neighbours to Crime Scene clean up!, the list goes on growing.

An estate agency franchise is a contract or agreement where the Franchisor, the Owner and Developer of the franchise system licences, franchisees the usage of trademarks, service marks, logos, or advertising owned or developed by the Franchisor. Some franchise methods are operated using solely the Franchisor's brand name like McDonald's. In others the franchised brand is used in tandem with a trade name which the franchisee establishes. Examples in Ireland include Coldwell Banker Paul Doyle Estates.

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The widespread brand enables all members in the franchising system to learn from advertising and good will generated from the operation of each unit whether operated by franchisees or the franchisor. Since consumers are brand driven, this larger, more recognised name created by common use of the franchise logo tends to drive customers to the franchised business.

Each profitable franchise organisation includes a technique of doing business which is common to all franchisees and franchisor. The business methods in the true estate market usually embody strategies of delivering services, standard signage, accounting methods, inventory management and data management. This systematic methodology of doing business employs a function of franchising referred to as "Speed to Market", that means a business can quickly expand their delivery of services to customers since they repeat profitable strategies in each transaction.

Franchisors usually levy an initial franchise payment followed by monthly royalty and advertising fees. Sometimes in Ireland the initial franchise payment is €20,000 to €35,000, on going royalty charges from 6% - 9% of gross revenue. There's usually minimum charges for the National Advertising Fund ranging from €3,000 each year to 2 half % of gross revenue. Other charges may be levied for the licence to the technology supplied, and ongoing training. This pooling of resources allows franchisees access to enterprise methods which might be ordinarily the province a lot larger organisations.

Most estate agency organisations require franchisees to contribute to regional or nationwide advertising funds and also to spend cash selling the brand locally. The benefits of cooperative advertising in franchise methods arise both from the increase number of commercials that multiple contributors can buy, and also from professional advertising agencies, market research, public relations, and all other support.

The franchisee is an independent operator with his own business. Franchisees operate their own businesses, are entitled to all profits which might be generated, are responsible for paying their own taxes and to their own employees. In Ireland the majority of estate company franchisees are conversions of present businesses rather than new start ups, (nonetheless that is changing in favour of start ups). This type of franchise occurs when the proprietor of an working estate company workplace decides to affiliate or franchise to a franchise chain to reap the benefits of the brand and certain components of the working system. This can be a completely different kind of franchise relationship than is often seen in the fast-food industry where the enterprise owners do not have to know anything about operating a restaurant with the intention to operate the franchise.

In affiliation franchising thus far in Ireland, the franchisee is allowed to continue using a pre existing trade name along with the franchisors brand name. Conversion franchising or affiliation franchising is probably the most generally used in estate agency. The franchisor seeks active owner operators, believing that value is added to a franchise enterprise by having the motivation and entrepreneurial efforts of owner operators.

The development of ecommerce and the internet has resulted in the potential improve in franchising. Via the internet and intra nets, franchising corporations are in a position to communicate quicker and better with franchisees, suppliers and consumers. Should you own an estate company is franchising best for you? That depends. Franchising is a business strategy in which the parties share many interests, but not all. Both parties rely on the efforts of the other for their own success, but don't essentially succeed simply because their associate does. Franchising solely thrives when each franchisor and franchisees achieve their objectives. Although it shares some attributes with a partnership, franchising just isn't a real "partnership". Nevertheless there are a lot of advantages of franchising. For example, enterprise owners don't have to maintain a brand name or consider one of the best ways to operate their business. These components are supplied by the franchisor which in turn allows franchisees to concentrate on increasing their business. The reputation that the brand conveys is instantly available to the new franchisees.

Franchising is a business relationship and each relationship is personal. No 2 people who are approached will find the same advantages or disadvantages of franchising. Many components will affect whether or not a franchise relationship is great, simply as many components affect whether or not any other personal or business relationship is good. And, as in any relationship, the benefits to the parties to a franchise relationship should, over the long run, out weigh any disadvantages, if the connection is to endure.

Expect no more than what the franchisor promises in writing in the franchise agreement. Verify your understanding of those promises through conversations with present franchisees and question the franchisor. Ensure that the franchisor responds to the problems that concern you about its programme before you enter into any agreement.

After the franchise agreements have been signed, most estate company franchisors will help franchisees to develop or revise business plans. Coaching and orientation of the franchisors business methods will be delivered within the first few months to the manager/proprietor of the franchisee firm and in cooperation with the manager/proprietor, training will be delivered to the sales agents and administrative staff. Some estate company franchisors also make use of enterprise consultants to liaise with the franchisees on an ongoing basis to help them to develop, innovate and improve their market share.

One of the valuable types of business consultation obtainable to estate company franchisee arises from the connection one franchisee develops with other franchisees throughout the network. Whether or not they meet regionally, regionally nationally or internationally franchisees in the same system develop a kinship and collegiality arising from the way in which they handle similar problems. Most franchise organisations have formal and informal franchisee networks, inside which franchisees are sometimes willing to share their experiences with their colleagues.

Most estate agents in Ireland are so focused on everyday operations that they've very little time to devote to research and development. Franchisors typically become aware of market tendencies and other developments if for no other cause than they operate in differing markets across the country or world wide and because they are active in industry associations. Estate company franchisors are usually leaders in their industries and make use of professional staff whose job description consists of finding methods to do things better. They naturally attract consultants and others with new products and business ideas. This information is generally freely passed onto franchisees and often works its way into the business methods of the franchise network.

On the reverse aspect, many franchisees typically come up with new ideas on methods of doing business, which in addition they share with their colleagues and the franchisor. In actual fact, most franchise agreements require this sharing of ideas and information. Most franchise organisations test new ideas for products with franchisees before "rolling them out" through the rest of the franchise organisation. This method to innovation can typically keep away from mistakes, although it does not dictate that each innovation or advertising and marketing plan will be successful.

Nevertheless, surely probably the most essential advantages is the business resale opportunity also called the "exit strategy. In some unspecified time in the future the owner of each enterprise needs to sell on or in any other case transfer ownership of his or her business. The business which has an established reputation and brand name typically is enticing for purchasers by the franchisor, present franchisees, as well as by prospective franchisees. As franchisors are regularly engaged in recruiting new franchisees in addition they may be able to determine somebody who would rather invest in an present enterprise rather than a brand new franchise business. Sometimes the franchisor in considering an initial public providing of its stock may want to acquire a profitable franchisees enterprise to make it a part of a public offer. This along with the fact that franchisees have contracts that provide assistance, access to business methods and a recognised brand name may enable franchisees to take part in and be paid a higher a number of of earnings than might be paid if the business was sold other than as a part of a publicly traded company. There's more likely to be a higher demand for a business that operates as a franchisee of a profitable franchising firm than there is for a small enterprise which has a single location and which is perceived to be successful primarily due to the reputation and abilities of the individual enterprise owner.

Franchising in estate agency is rising rapidly. In Ireland of the 1200 estate businesses round 470 are in franchise or quasi franchise groupings. Although solely over 1/3 of the workplaces these groups have over 2/3 of the market share.

So if you're considering increasing your estate agency enterprise or setting up then you need to consider franchising. We expect it will even make your bank manager smile.