2009 Franchise Report: Power of the Brand

As the industry retrenches, franchisors--large and small--lay the groundwork for growth.

October 1, 2009

Successful franchises benefit from strong brand recognition, but during a period of industry turmoil, even household names are taking it on the chin.

For recent franchise startup America’s Realty in Roswell, Ga., that’s been a good thing. The growing company, which charges no franchise fee, has taken advantage of the down market to recruit independent brokers who may have otherwise gone with a big-name competitor, says founder and President Carl Fleischer. Since 2007 the company has grown to 20 offices and about 400 agents, up from five company-owned offices and 225 agents.

America’s Realty, on the Emerging Players list, is among a handful of franchise companies to notch any notable growth since the magazine’s last Franchise Report in 2007. Two-thirds of respondents have fewer offices today, and most are holding the line on franchise fees.

Still, when the economy rebounds, the biggest players should do well, says real estate franchise consultant David DePhillips of Garden City, N.Y. "There’s safety in numbers," he says. "It comes from being part of a brand that offers training and mentoring with a proven track record. Success is not about filling the place up with bodies. It’s about building offices with quality agents."

Recruiting high-producing associates has kept franchisors like Assist-2-Sell, a leading discount firm, from altering its fee structure. "If we cut our franchise fee in half, we wouldn’t get the quality of agents we want. We don’t need 100 agents to do 100 deals," says senior vice-president Ryan Elliott. "You want to create a certain barrier to entry." But once a franchisee joins the fold, access to shared educational resources and marketing expertise are invaluable. "It helps not to be alone in this economy," he says.

Fleischer, meanwhile, isn’t losing sleep over the exponentially greater cash flow of the industry’s big players. "If I can make it during these slower times, I’m certain that I’ll make it bigger during the good times. Large successful companies didn’t get where they are overnight. It will take us time to get there, too."

Wendy Cole

Wendy Cole is the former managing editor of REALTOR® Magazine.