So you want to be your own boss, you love Homes under the Hammer and when you go on holiday, Rightmove checks if their website has gone down because the traffic to their site drops by a third? Sound familiar?
If you have thought of leaving your job and starting your own lettings/estate business, I bet you haven’t even considered a franchise. Why? .. because they are a waste of money, you are shackled to something, your cant have freedom, your office has to look identical to brand .. the list goes on.
But its not all bad ... here are four thoughts on letting / estate agency franchising
1. You want to work for yourself.
Becoming a franchise owner is a great way to avoid ever having to deal with a tough job market ever again, but it isn’t a bed of roses. You will have the Head Office to deal with. I have seen that this isn't a relationship that will be likely to work for someone who is stubborn and independent. For example, if you own a Martin and Co franchise, while you can do things like hire and fire employees, you change the logo to a nice shade of purple, but that is a good thing because you do not buy a franchise because you want to change it. You buy it because it's a tried and tested business model. So if you like to do things your own way and you keep questioning the underlying business model of whatever business you are considering, then franchising isn’t for you
2. Agency in a box
Many people buy a letting agency (or estate agency) franchise expect a "lettings agency in a box." They have a mistaken belief that when you open the doors, landlords and free valuations will come like a flood and it will run itself. I am sorry, it doesn’t work like that, you need to be motivated and willing to put time and energy into your franchised business, to make your investment pay off, and you must follow the franchisor's system down to the letter.
3. You don't want to take too much of a risk.
The advantages of going into franchising are that you have the experience of the franchisor and the system's established franchisees that can guide and support you. A good franchisor will offer ongoing training and support and you have buying power and efficiencies of scale in the franchise system. The franchisor can negotiate lower prices for things like Rightmove and Zoopla, vital things you need to run your agency business.
4. It may be less risky than starting your own business, but it is still a risk.
Starting your own agency franchise is not without risk. It is true the banks will lend up to 70% of the venture to fund a lettings franchise at decent loan rates. If you are a one man band, you are looking at no more than 40% to 50% at eye watering rates that would make Wonga purse its lips. Franchises do fail though .. it’s quite rare but they do fail though. Be aware of that.
Too many of us get caught up in what we are supposed to be doing that we lose sight of what we are meant to do. I have met over 200 estate and letting agency franchisees over the past few years. I have met exceptional ones, good ones, average ones and damn right poor ones. The best franchise owners are exceptional operators, who work ON the business, not IN the business. That is not to say that is all you need to do, to be successful in franchising.
Don’t buy a franchise because you think the brand itself will drive punters to your door. Brand is important, very important in the success or failure of a lettings/estate agency business, but so is your location, market strength, service and your employees. But the biggest by a country is the courage, determination and resilience of the business owner. If you haven’t got the fire in your belly and balls made of Uranium, whether you have a franchise or not, you won’t succeed.
So should you franchise? I say both yes and no. It depends on you.
PS The people that fail with franchises would have failed without a franchise... it’s as simple as that.