Realtors - Working for Franchised Versus Independent Firms

Sep 22, 2010
Toby Welch

Realty Signs From Numerous Firms - The Truth About Mortgage

Should Realtors work for an independent real estate firm or should they go with a franchised firm? Those in the industry weigh in.

When I asked Karen Amos, a real estate representative with Amos Realty in Oliver, British Columbia, what an independent firm can offer that a franchise can’t, she responded, “I'd like that turned around – what can a franchise offer that an independent can’t? My answer – nothing! We have access for good prices at everything they can offer. Selling real estate is marketing, and good marketing ideas are available to all of us now that there's the Internet. Good business ideas are available everywhere now ... anything you want to do or know how to do is available on the Internet!"

Franchise marketing rationale is that the 'franchise' is a sign that you can know and trust. The reason being people see the sign and are supposed to be able to feel the sense of well being that the office is known and respected in the community. As an example, everyone knows that a Big Mac is supposed to taste the same everywhere you go.

Amos explains how the independent firm she works for uses not being part of a franchise to their advantage. “When we opened our independently owned office of Amos Realty, we thought a negative might be that we weren't a franchise name and why would people come to us vs. 'them'. It did all come down to 'trust' and how did they know we weren't a 'fly by night' office? So to counteract that, we took a possible negative and turned it into our positive. My husband, Brian Amos, and his family have lived in Oliver since 1922, hence Amos Realty. Since 1922 our families have served the Okanagan. No franchise in this area can say that!”

Name Recognition of Franchised Firms

What about the argument that you can’t beat the name recognition?

Cliff Majak, the Broker/Owner of Imperial land Services Inc. in Red Deer, Alberta, shares his thoughts, “In my mind and view of success in real estate, the recognition of the individual far outweighs any name recognition of the firm. In more cases than not, when an individual starts with a larger franchise firm they get lost in the sea of names and people and can actually have this factor working against them. For the aggressive, 'want to work' individual, the smaller independents allow the individual to rise to the top. In our firm it is all about promoting the agent, not the company. Yes, some of the public may chose the franchise firm over the independent simply for the same reason people use McDonalds instead of the owner-operator hamburger place – familiarity with the name. Properly marketing yourself is of greater importance for success in real estate than the firm you are with. If you were to compare or place the identical agent in either a franchise model or an independent model, I believe that the individual in the independent will in the end put more income in their pocket.”

While some might argue that a franchise offers unbeatable marketing strength, with the money you save from not paying franchise fees and a portion on your profits, you could launch your own dynamic marketing plan.

Amos believes there are many advantages to working for an independent. “The obvious reason is that you aren't governed by all of the rules of a franchise. Franchises are mostly cookie cutter operations. One size fits all and all usually stands for your big city type operations where numbers of Realtors are the game. The little guys or the feeder companies slowly fall away as they can't afford the format the franchises push. When you belong to a franchise, the mother office suggests individuality but only blended with all of their franchise cover. The mother franchise doesn't advertise anything but themselves as an image. Their 'inventory' is offices with salespeople; that's what they advertise. We as independents spend our advertising dollars totally on our own individual offices. Our offices are truly owned and operated by local individuals who put back into their communities.”

Benefits of Working for an Independent Real Estate Firm

Majak shares more benefits of working at an independent firm:

Less time is wasted in the model of business that we use. Our business is set up for the entrepreneur, for the individual that is looking to make a profit. If you are looking for awards or corporate recognition, our model is not the place for you. If production and profit is what you are after, I believe on a per agent basis we are more profitable for the individual agent than the franchises.
There are no additional fees paid for often little benefits.
I do not hold group meetings. I found these were largely a waste of agent time.
Training is done on an as needed basis.
Our smaller office concept allows our agents to have access to the broker 24/7.
In our concept we do not provide office space as all our agents have their own places of business as often the real estate business is an extension of their other business involvement. This saves them a lot of expense.
The agents have greater flexibility to do their business as they see fit and truly run an independent operation without the broker monitoring their daily activities.
I believe we actually have greater visibility for our advertising and signage because we are unique.
Overall it is about making money and that is what we offer foremost to our agents.
Time invested in the business versus money earned is higher I believe in the independent brokerages.

Cliff Majak makes a great point, “The idea that the broker will make more money by having a franchise – I am not sure that that can be substantiated. Will having a franchise help you attract more agents? I believe it can. At the end of the day it still comes back to profitability, not size. If it is about being big, then yes a major franchise flag will help. For me it is about quality of life and profitability.”