Franchise fees, commission and pay structures are the driving factors for most industry professionals when it comes to either leaving or joining a real estate company, according to new data.
Real Estate Business recently surveyed 486 sales agents, principals and property managers about what would make them leave their current network/independent arrangement, and what they would focus on when looking to join a new network.
When asked to rank the reasons to change their current network or independent arrangement, respondents ranked franchise fee/commission structure/pay structure as the most important factor (37.3 per cent).
This was followed by insufficient training/education support (31.5 per cent), poor IT/technology (25.1 per cent), weak brand (24.7 per cent), lack of marketing/advertising support (23.7 per cent), and not enough head office support (20.7 per cent).
Franchise fee/commission structure/pay structure was also important in deciding which network or indpendent office to join, with 61.2 per cent of respondents giving this a very important rating. This was closely followed by brand, which was conisidered most important by 60 per cent of respondents (respondents were asked to rate each of six categories, from most important to least important).
Yet according to LJ Hooker network development manager Andrew McCulloch, the group were not finding fees were an issue for prospective franchise owners.
“Those that have opened an LJ Hooker office have joined us because they are attracted to our brand, service proposition and high level of support,” he told Real Estate Business.
“So in fact, we are finding the opposite. Their greatest concern is not about fees but helping them to keep on top of marketing, brand development, technology and internal systems so they can concentrate on selling and leasing homes – their core business.”
Mr McCulloch's views were consistent with last year's survey results, which revealed that brand was the main reason for changing real estate companies.
Managing director of WA-based Realmark John Percudani said the reasons for agents to switch groups were symptoms of their dissatisfaction with the value and culture of their company.
“I think that people revert to talking about the fee, or the lack of support or the lack of training or the lack of IT because they are the tangible manifestations of it, but the real underlying challenge is the bottom line that they do not see value in the proposition, they’re not seeing value in the relationship.”
He explained that Realmark’s business model was relationship-based rather than how much business people wrote or how prominent they were.
“It’s how well they’ll mesh into the current culture and the current organisation, how good a sharer they will be, how open and transparent they will be, how much they have invested in the collective good and being a true leader.”
Mr Percudani said the industry was often fixated on the cosmetics of a brand rather than its underlying value.
“Too often it’s about the colours, the size of the brand, the number of offices we’ve got but it’s not about quantity, it’s about value and it’s whether or not it talks to me – me as the consumer, me as the member of the brand.
“The brand is only a representation of the tribal belonging. It’s just a flag. It’s just something we rally under but that’s not the real issue. The real issue is what are the values and what does the brand promise that resonates under that bit of iconic symbolism."