More franchise offices switching to independents

The number of franchise agencies moving to independents has doubled in recent years as principals follow customers seeking a more ‘authentic’ consumer experience.

According to a recent franchising market report, once dominant brands such as Gloria Jeans are losing ground to a grass roots resurgence from local cafes.

The report suggested shifts in consumer needs and a growing trend towards a more focused, individualised approach to business has seen franchising decline across a variety of sectors in recent years, and according to industry coach and head of the Real Estate Results Network (RERN) Michael Sheargold, real estate is included.

“Nowhere is the decline more prominent than in the real estate sector,” Mr Sheargold said.

“Our data shows a definite shift in consumer attitudes, and that is translating to a rise in independent real estate agencies,” he said. “What we know is that consumers want more from their agents.”

He claims the appeal of an ‘individual approach’ is preferred by modern consumers over the sanitised corporate logos and methods.

“They want a direct focus on their property and their individual circumstances. Agencies simply cannot offer that if they are operating under restrictive guidelines such as those many franchises dictate, so they are looking for new, smarter ways to do business,” Mr Sheargold said.

Managing director of WA-based independent office network Ausnet Paul Niardone told Real Estate Business that he had also seen the rise of independent offices.

“There’s a new trend starting of micro-offices or sales teams going out and working independently. The market’s changing and the franchise groups have to adapt," he said.

“People view some of the brands as becoming homogenised and offering more of the same. But I honestly think the issue is what value do franchises offer anymore?”

According to Mr Niardone, principals used to buy into a franchise for the systems, procedures and the brand.

“While a lot of that is still useful, the brands have been weakened over the years, thanks to the internet. People don’t walk into offices to look at what’s on the market – they go online," he said.

“A lot of the value they used to offer has been eroded so people start asking what they’re paying for.”

Matthew Bourn, owner of Sydney’s mcconnellbourn agency, member of RERN, and ranked 31st in last year’s Real Estate Business Top 100 Agents ranking has seen first-hand the benefits of operating as an independent.

“When I started my own business, having been with Richardson & Wrench for many years, I had to decide whether I wanted to be a franchise or an independent,” Mr Bourn said.

“So I looked at what I wanted to offer my clients – things like better communication, a focused approach to their needs, the freedom to make decisions and implement strategies unique to their sale – and a franchise didn’t offer much to be honest.”

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