Network brands help, but independents still thrive

Simon Parker and Stacey Moseley

Tough times will hurt all real estate agencies, regardless of whether they're an independent or part of a group, although a strong brand will definitely help, a number of principals have said in relation to an industry poll on the subject.

Greg Hocking, director at the Melbourne-based franchise group of the same name, said it’s tougher these days for independents to get started in what are very competitive markets.

Mr Hocking, who also co-founded Victorian franchise group hockingstuart before leaving to start his current group three years later, said in years gone by, the growth of independents generally stemmed from a group of disaffected agents departing an agency for various reasons, with a view to starting up their own competing agency.

“There hasn’t been much evidence of this in Melbourne for a long time,” the 30-year industry veteran told Real Estate Business.

The Melbourne and Sydney markets were particularly tough in this regard, he continued, as multiple well-known brands battled for a share of increasingly saturated markets.

According to Mr Hocking an agency’s success wasn’t solely based on whether they were an independent or part of a larger network.

“Boutique brands can live OK, but it is a long road [to success],” he said.

And big, well-known brands did bring with them some market clout, he added.

“It’s easier to start on the back of a brand that has market penetration,” Mr Hocking said.

Mr Hockings comments come at the same time that a Real Estate Business straw poll revealed that 39 per cent of respondents believe both independent agencies and franchise shopfronts struggle during tough times. The online survey, which was conducted between February 16 and 23, showed 95 of the 328 respondents said they believed independents would struggle more than agencies in franchises, whilst 32 per cent - or 105- believed that independents did not struggle more than franchise agencies.

When asked whether franchise networks were more attractive in tougher times, John Cunningham, principal at Cunninghams Property, said he felt the opposite was true.

“It’s a fallacy," he told Real Estate Business immediately after winning the principal of the year gong at the 2012 annual Australasian Real Estate Results Network Awards.

"We look at other franchises purporting to be the biggest in our area that just aren’t performing." He pointed to a franchise group that has 14 offices in his local area - the northern beaches of Sydney - that only does 250 per cent of his turnover. His one office has 33 staff.

"A franchise is just a little ‘hidey hole’ for people to hide in because they can’t do their own thing," he continued. "Sounds a bit vicious I know, but the reality to me is an independent has an opportunity to create their own destiny, do their own thing, do things differently, because that’s what we’re about.

"We look at everything that happens in the marketplace and say, how can we do things differently. Or how can we do the things that other people aren’t doing. That’s the little things that make the big differences.”

"It's about adaptability, and being agile in response to market changes," he added.

However franchise licencee Dennis Vlandis of LJ Hooker Belconnen, in the ACT, disputed these comments.

“I can tell you, in business, when you employ staff and have payroll needs to be covered each week, there is nowhere to hide. This does not matter if you’re an independent or part of a franchise.

“The brand is not going to mothball you away from competitive business,” he told Real Estate Business.

“All things equal; there are good and bad agents in franchises and good and bad agents working as independents.”

Mr Vlandis did recognize the extra support franchisees receive from their brands, when compared to the limited resources often available to independents.

“When times are tough having a recognized brand behind you is beneficial to any business owner,” he said.

Simon Parker and Stacey Moseley

Tough times will hurt all real estate agencies, regardless of whether they're an independent or part of a group, although a strong brand will definitely help, a number of principals have said in relation to an industry poll on the subject.

Greg Hocking, director at the Melbourne-based franchise group of the same name, said it’s tougher these days for independents to get started in what are very competitive markets.

Mr Hocking, who also co-founded Victorian franchise group hockingstuart before leaving to start his current group three years later, said in years gone by, the growth of independents generally stemmed from a group of disaffected agents departing an agency for various reasons, with a view to starting up their own competing agency.

“There hasn’t been much evidence of this in Melbourne for a long time,” the 30-year industry veteran told Real Estate Business.

The Melbourne and Sydney markets were particularly tough in this regard, he continued, as multiple well-known brands battled for a share of increasingly saturated markets.

According to Mr Hocking an agency’s success wasn’t solely based on whether they were an independent or part of a larger network.

“Boutique brands can live OK, but it is a long road [to success],” he said.

And big, well-known brands did bring with them some market clout, he added.

“It’s easier to start on the back of a brand that has market penetration,” Mr Hocking said.

Mr Hockings comments come at the same time that a Real Estate Business straw poll revealed that 39 per cent of respondents believe both independent agencies and franchise shopfronts struggle during tough times. The online survey, which was conducted between February 16 and 23, showed 95 of the 328 respondents said they believed independents would struggle more than agencies in franchises, whilst 32 per cent - or 105- believed that independents did not struggle more than franchise agencies.

When asked whether franchise networks were more attractive in tougher times, John Cunningham, principal at Cunninghams Property, said he felt the opposite was true.

“It’s a fallacy," he told Real Estate Business immediately after winning the principal of the year gong at the 2012 annual Australasian Real Estate Results Network Awards.

"We look at other franchises purporting to be the biggest in our area that just aren’t performing." He pointed to a franchise group that has 14 offices in his local area - the northern beaches of Sydney - that only does 250 per cent of his turnover. His one office has 33 staff.

"A franchise is just a little ‘hidey hole’ for people to hide in because they can’t do their own thing," he continued. "Sounds a bit vicious I know, but the reality to me is an independent has an opportunity to create their own destiny, do their own thing, do things differently, because that’s what we’re about.

"We look at everything that happens in the marketplace and say, how can we do things differently. Or how can we do the things that other people aren’t doing. That’s the little things that make the big differences.”

"It's about adaptability, and being agile in response to market changes," he added.

However franchise licencee Dennis Vlandis of LJ Hooker Belconnen, in the ACT, disputed these comments.

“I can tell you, in business, when you employ staff and have payroll needs to be covered each week, there is nowhere to hide. This does not matter if you’re an independent or part of a franchise.

“The brand is not going to mothball you away from competitive business,” he told Real Estate Business.

“All things equal; there are good and bad agents in franchises and good and bad agents working as independents.”

Mr Vlandis did recognize the extra support franchisees receive from their brands, when compared to the limited resources often available to independents.

“When times are tough having a recognized brand behind you is beneficial to any business owner,” he said.

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