Taking the Pulse of Franchises

July 1, 2011

We have a game at home that we use to generate dinner table talk. It’s a stack of cards, and on each card is a question asking about a topic such as your favorite summer ritual or defining characteristics of your family. One question reads: What has been the most important technological development in your lifetime?

Personal computers, mobile phones, and the Internet sprang into my mind. But without the Internet, the PC would be just a juiced-up typewriter and the mobile phone would be just a carry-around phone with cool features. The Internet has changed everything, forcing companies to rethink their value proposition—or, looked at another way, giving companies new opportunities for creating value. That dichotomy is at the heart of a struggle going on right now between the nation’s independent real ­estate brokers and franchise brands. A change to NATIONAL ASSOCIATION OF REALTORS® multiple listing policy in November 2010 enabled national franchise brands to begin building new Web applications that would tie together the IDX feeds of MLSs around the nation. Many large independents cried foul, and at a meeting in May, NAR’s Board of Directors made a change to the policy that will require brokers to opt in to have their listings in such a collection. Now, a presidential advisory group is trying to sort through the debate—and I don’t envy its task. Franchises say they need nationwide listings in order to better serve customers; large independents argue that franchise aggregations go beyond the intended use of MLSs’ IDX data.

It was against this backdrop that I looked at this year’s Franchise Report. The package looks at how the nation’s franchises stack up in terms of number of offices and the cost of doing business with them. We show the data without rankings; it’s an alphabetical list of 35 brands (though four are broken out as emerging players).

Although most franchise companies this year reported a net loss of offices, as you’d expect given the prolonged economic malaise, what struck me is the strength national franchise brands retain in the industry. That was borne out in NAR’s latest Member Profile, released in late May, which showed that more NAR members are affiliated with franchises than with ­independents. Even in the age of the Internet—when individual practitioners have the tools to strike out with their own branding—tried-and-true brands have power. I’ll be watching to see whether the MLS policy debate affects the balance between franchises and independents. What do you think?

Stacey Moncrieff

Stacey is executive editor of publications for the National Association of REALTORS® and editor-in-chief of REALTOR® Magazine.