| The concept of Estate Agency Franchise although | | | | objectives. Although it shares some attributes with a |
| relatively new in Ireland is more mature and common | | | | partnership, franchising is not a true "partnership". |
| place in other jurisdictions or other countries particularly | | | | However there are many benefits of franchising. For |
| the United States. | | | | example, business owners do not have to maintain a |
| The earliest sign of franchising in any sector dates | | | | brand name or consider the best way to operate their |
| back to the 1850's with Isaac Singer the inventor of the | | | | business. These elements are provided by the |
| Singer sewing machine. During his search for an | | | | franchisor which in turn allows franchisees to |
| effective and an affordable way to distribute his | | | | concentrate on expanding their business The |
| product for his company, the Singing Sewing Centre, | | | | reputation that the brand conveys is immediately |
| Singer ran into problems that prevented his company | | | | available to the new franchisees. |
| from being successful. His first problem was a lack of | | | | Franchising is a business relationship and each |
| capital for manufacturing his machines. Secondly, no | | | | relationship is personal. No two people who are |
| one was willing to buy his sewing machines without | | | | approached will find the same advantages or |
| first being taught how to use them, which required | | | | disadvantages of franchising. Many factors will |
| effort that most traditional retailers could not provide. | | | | influence whether a franchise relationship is good, just |
| Singer's solution was to charge licensing fees to | | | | as many factors influence whether any other personal |
| business people who would own the rights to sell his | | | | or business relationship is good. And, as in any |
| machines in certain geographical areas. They would | | | | relationship, the benefits to the parties to a franchise |
| also be responsible for teaching consumers how to | | | | relationship must, over the long term must out weigh |
| use his machines, thereby creating sales opportunities. | | | | any disadvantages, if the relationship is to endure. |
| Other companies noticed this novel approach and | | | | Expect no more than what the franchisor promises in |
| modified this business model. Now there are franchise | | | | writing in the franchise agreement. Confirm your |
| companies providing a plethora of products and | | | | understanding of those promises through |
| services to consumers and businesses around the | | | | conversations with existing franchisees and question |
| world. From "Bark Busters" a franchise to keep dogs | | | | the franchisor. Ensure that the franchisor responds to |
| from barking and disturbing the neighbours to Crime | | | | the issues that concern you about its programme |
| Scene clean up!, the list keeps on growing. | | | | before you enter into any agreement. |
| An estate agency franchise is a contract or | | | | After the franchise agreements have been signed |
| agreement where the Franchisor, the Owner and | | | | most estate agency franchisors will help franchisees |
| Developer of the franchise system licences, | | | | to develop or revise business plans. Training and |
| franchisees the use of trademarks, service marks, | | | | orientation of the franchisors business systems will be |
| logos, or advertising owned or developed by the | | | | delivered within the first few months to the manager |
| Franchisor. Some franchise systems are operated | | | | owner of the franchisee company and in cooperation |
| using only the Franchisor's brand name such as | | | | with the manager/owner, training will be delivered to |
| McDonald's. In others the franchised brand is used in | | | | the sales agents and administrative staff. Some estate |
| tandem with a trade name which the franchisee | | | | agency franchisors also employ business consultants |
| establishes. Examples in Ireland include Coldwell Banker | | | | to liaise with the franchisees on an ongoing basis to |
| Paul Doyle Estates. | | | | assist them to grow innovate and increase their |
| The common brand enables all participants in the | | | | market share. |
| franchising system to benefit from advertising and | | | | One of the most valuable forms of business |
| good will generated from the operation of each unit | | | | consultation available to estate agency franchisee |
| whether operated by franchisees or the franchisor. | | | | arises from the relationship one franchisee develops |
| Since consumers are brand driven, this larger, more | | | | with other franchisees within the network. Whether |
| recognised name created by common use of the | | | | they meet locally, regionally nationally or internationally |
| franchise logo tends to drive customers to the | | | | franchisees in the same system develop a kinship and |
| franchised business. | | | | collegiality arising from the way they address similar |
| Every successful franchise organisation involves a | | | | problems. Most franchise organisations have formal |
| method of doing business which is common to all | | | | and informal franchisee networks, within which |
| franchisees and franchisor. The business systems in | | | | franchisees are typically willing to share their |
| the real estate market usually include methods of | | | | experiences with their colleagues. |
| delivering services, standard signage, accounting | | | | Most estate agents in Ireland are so focused on day |
| systems, inventory control and data management. This | | | | to day operations that they have very little time to |
| systematic method of doing business employs a | | | | devote to research and development. Franchisors |
| feature of franchising known as "Speed to Market", | | | | often become aware of market trends and other |
| meaning a business can rapidly expand their delivery | | | | developments if for no other reason than they operate |
| of services to consumers since they repeat | | | | in differing markets around the country or around the |
| successful methods in every transaction. | | | | world and because they are active in industry |
| Franchisors usually levy an initial franchise fee followed | | | | associations. Estate agency franchisors are usually |
| by monthly royalty and advertising fees. Typically in | | | | leaders in their industries and employ professional staff |
| Ireland the initial franchise fee is 20,000 to 35,000, | | | | whose job description includes finding ways to do |
| on going royalty fees from 6% - 9% of gross revenue. | | | | things better. They naturally attract consultants and |
| There's usually minimum fees for the National | | | | others with new products and business ideas. This |
| Advertising Fund ranging from 3,000 per annum to | | | | knowledge is generally freely passed onto franchisees |
| 2 1/2% of gross revenue. Other fees may be levied | | | | and often works its way into the business strategies |
| for the licence to the technology provided, and ongoing | | | | of the franchise network. |
| training. This pooling of resources allows franchisees | | | | On the reverse side many franchisees often come up |
| access to business systems that are ordinarily the | | | | with new ideas on ways of doing business, which they |
| province much larger organisations. | | | | also share with their colleagues and the franchisor. In |
| Most estate agency organisations require franchisees | | | | fact, most franchise agreements require this sharing of |
| to contribute to regional or national advertising funds | | | | ideas and information. Most franchise organisations |
| and also to spend money promoting the brand locally. | | | | test new ideas for products with franchisees before |
| The benefits of cooperative advertising in franchise | | | | "rolling them out" through the rest of the franchise |
| systems arise both from the increase number of | | | | organisation. This approach to innovation can often |
| advertisements that multiple contributors can buy, and | | | | avoid mistakes, although it does not dictate that every |
| also from professional advertising agencies, market | | | | innovation or marketing plan will be successful. |
| research, public relations, and other support. | | | | However, surely one of the most important benefits is |
| The franchisee is an independent operator owning his | | | | the business resale opportunity also called the "exit |
| own business. Franchisees operate their own | | | | strategy. At some point the owner of every business |
| businesses, are entitled to all profits that are generated, | | | | wants to sell on or otherwise transfer ownership of his |
| are responsible for paying their own taxes and to their | | | | or her business. The business which has an established |
| own employees. In Ireland the majority of estate | | | | reputation and brand name often is attractive for |
| agency franchisees are conversions of existing | | | | purchasers by the franchisor, existing franchisees, as |
| businesses rather than new start ups, (however this is | | | | well as by prospective franchisees. Because |
| changing in favour of start ups). This form of franchise | | | | franchisors are regularly engaged in recruiting new |
| occurs when the owner of an operating estate | | | | franchisees they also may be able to identify |
| agency office decides to affiliate or franchise to a | | | | someone who would rather invest in an existing |
| franchise chain to take advantage of the brand and | | | | business rather than a new franchise business. |
| certain components of the operating system. This is a | | | | Sometimes the franchisor in considering an initial public |
| different type of franchise relationship than is typically | | | | offering of its stock may want to acquire a successful |
| seen in the fast-food industry where the business | | | | franchisees business to make it a part of a public |
| owners do not need to know anything about running a | | | | offer. This along with the fact that franchisees have |
| restaurant in order to operate the franchise. | | | | contracts that provide support, access to business |
| In affiliation franchising to date in Ireland, the franchisee | | | | systems and a recognised brand name may enable |
| is allowed to continue using a pre existing trade name | | | | franchisees to participate in and be paid a higher |
| along with the franchisors brand name. Conversion | | | | multiple of earnings than might be paid if the business |
| franchising or affiliation franchising is the most | | | | was sold other than as a part of a publicly traded |
| commonly used in estate agency. The franchisor | | | | company. There is likely to be a higher demand for a |
| seeks active owner operators, believing that value is | | | | business that operates as a franchisee of a |
| added to a franchise business by having the motivation | | | | successful franchising company than there is for a |
| and entrepreneurial efforts of owner operators. | | | | small business which has a single location and which is |
| The development of ecommerce and the internet has | | | | perceived to be successful primarily because of the |
| resulted in the potential increase in franchising. Through | | | | reputation and skills of the individual business owner. |
| the internet and intra nets, franchising companies are | | | | Franchising in estate agency is growing rapidly. In |
| able to communicate faster and better with | | | | Ireland of the 1200 estate agencies around 470 are in |
| franchisees, suppliers and consumers. If you own an | | | | franchise or quasi franchise groupings. Although only |
| estate agency is franchising right for you? That | | | | over 1/3 of the offices these groups have over 2/3 of |
| depends. Franchising is a business strategy in which | | | | the market share. |
| the parties share many interests, but not all. Both | | | | So if you are considering expanding your estate |
| parties depend on the efforts of the other for their | | | | agency business or setting up then you should |
| own success, but don't necessarily succeed just | | | | consider franchising. We think it will even make your |
| because their partner does. Franchising only thrives | | | | bank manager smile. |
| when both franchisor and franchisees achieve their | | | | |