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The internet has become an unrivalled source for many real estate agents to advertise their properties, which has sparked franchises to fight to stay relevant.
Harcourts CEO Steve Caradoc-Davies told Real Estate Business earlier this year that franchises need to make sure their franchisees are well equipped to stay relevant.
“I think if franchisees don’t move with the times, they will start voting with their feet,” he said.
That has sparked a lot of people to speculate that franchising is coming to an end, The Agency CEO Matt Lahood told Real Estate Business.
“I think there is a place for the person that wants to run their own business, but I think the franchise offering is really under threat, so it needs to change to stay relevant,” he said.
There was a time when an agent drew great benefit from being part of a franchise, but now we are seeing more emphasis on the agent’s name rather than the branding.
“We are seeing a lot of agents’ names appearing, and they’re launching their own website,” Mr Lahood said. “We are seeing people listing properties on Facebook, LinkedIn, and selling properties on social media, which bids the question, what am I paying a franchise fee for?”
The cost of a franchise fee used to hold value with buying power, but with real estate portals, that perk has been eroded.
“There used to be a benefit where they offered trainers, exclusive trainers to a franchise. Now, most of the trainers need scale, they have their own websites, so you can go to them directly,” Mr Lahood said.
From the feedback Mr Lahood is getting from agents, there is a view they struggle to see value in the franchise fee and feel all franchises have started to become the same.
However, contrary to what he has heard from other agents, Mr Lahood believes there are still franchises out there who add value, but they have to have scale.
“There are some franchises stuck between big and small, and they’re just offering a little bit more than what an independent has, so they are in the middle of a highway waiting to be run over,” the The Agency CEO said.
“I think the franchise is going to end up shifting, like an offering where it is an added value service. It might be a flat-fee type thing where you are part of a brand. But then added-value things come behind it, whether it’s social media offerings... but you have to pay for those services rather than just a franchise.”
Franchises also have to become alert to an agent’s needs so they have choice and flexibility, instead of having a one-size-fits-all approach.
“If you are a franchise, you need to be agile. The brand might be the same, but the offerings have to change within the brand,” he said.
“They’ve got to adapt or die.”
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