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Wanna buy a real estate franchise? Here’s how to pick the one for you

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Brand strength, business support and core company values are key things to consider before buying into a real estate franchise. Then, of course, there is suburb research, your access to finance and how long it takes to start seeing returns on your investment.

We thought we’d ask the franchisees of some of South Africa’s most popular real estate brands for their motivations for choosing the company they did as well as what potential new franchisees can expect when buying and setting up an established brand. And because they’re all great companies, we’ve arranged them in alphabetical order.

HarcourtsHarcourts Logo2

Etienne Labuschagne, Harcourts Select & Harcourts Winelands

Q Why did you choose to open a real estate franchise?

A I love the property industry and wanted to make a difference.

 

Q Why did you choose the company you did?

A Harcourts values and culture resonated with me.

 

Q If there is one thing you could change, what would it be?

A To get all the offices countrywide offering the same level of service and dedication.

 

Q How long does it take to start seeing returns on your investment?

A Depends on the operator; normally two years.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Make sure the company you want to join has a national footprint with positive growth, a clearly defined values system, a strong culture and leadership, the best technology platform, quality training academy and ongoing support structures.

 

Simon Smith, Harcourts Full Circle & Harcourts Blue

Q Why did you choose to open a real estate franchise?

A I operated as an independent for four years before joining a franchise group. My reason for buying a real estate franchise was to gain access to a national brand, have access to top-class training for my agents and to take advantage of the advanced technology and websites they offered.

 

Q Why did you choose the company you did?

A I chose Harcourts because it offered all of the above but in addition to that it has an excellent set of values by which the organisation is run.

 

Q What has been the toughest part of belonging to a real estate franchise?

A Sometimes having to comply with a policy or procedure that I don’t necessarily agree with, but the majority of the other business owners do agree with.

 

Q How long does it take to start seeing returns on your investment?

A A minimum of 18 to 24 months.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Choose an organisation that has the same value system you have and make sure that you are going to be happy to pay ongoing royalties for the service and support it provides.

 

Jenny Shaw and Robyn Smith, Harcourts Two Oceans

Q Why did you choose to open a real estate franchise?

A We were an independent agency so everything had to be done manually. The assistance given by a franchise regarding websites and marketing is invaluable.

 

Q Why did you choose the company you did?

A It is not a family-owned business and has a “bottom up” approach rather than “top down” business management. This allows us to have control of our business within the franchise framework. Harcourts’ systems, training and marketing support are very good. Very importantly the company values fit with our values.

 

Q What is the toughest part of starting a new real estate franchise?

A Getting the brand known in the area and building the brand as a company that one can trust and is professional.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Choose carefully and read all the fine print. Talk to other franchisees. Be sure to have some autonomy in the way you are able to run your business as every area is different (micro economically). Research the level of support you get from head office.

 

Jawitz PropertiesJawitz Logo_stone

Cheryl Petzer, Jawitz Properties East London

Q Why did you choose to open a real estate franchise?

A We were a small independent real estate company prior to investing in the Jawitz franchise. But there came a time when we found that, when up against the bigger franchise agencies, our sellers wanted the additional services that the more established companies could offer. The Jawitz franchise has given us the credibility that has enabled us to grow and build a reputation in East London.

 

Q Why did you choose the company you did?

A Jawitz Properties believes in the same values and ethics that we have always stood for. In addition, it operates in the same manner in which we like to conduct our business. Being part of such a reputable brand has given us a whole new meaning of “real estate”. We don’t just do real estate, we live it.

 

Q Was the cost to purchase and licensing fees a major influencing factor in your decision?

A Yes, it enabled us to have a “packaged” deal where all costs were inclusive. The franchise has allowed us to benefit from the 47 years of the Jawitz experience in the residential market, plus the advantage of being privy to all that knowledge which has helped in our success.

 

Q What is the toughest part of starting a new real estate franchise?

A Building the brand name has been the hardest in our region, due to lack of footprint. Fortunately, the backing, support, the systems and guidance from the company played a major role in helping us get to where we are today.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Be sure you know who and what the brand name stands for when buying. I believe there should be synergy and it’s important to find out how the brand can bring value to your business. Always make use of the benefits of the franchise. When faced with a business problem, call on the experts in the company who can offer advice and direction.

 

Ross Gillett, Jawitz Centurion

Q Why did you choose the company you did?

A Because it is one of the leading real estate brands with a very high standard of integrity and professionalism.

 

Q What is the toughest part of starting a new real estate franchise?

A There is a tremendous amount of competition in Centurion and establishing the Jawitz brand in this market is a challenge. The level of competition attracting new agents is also very difficult.

 

Q How long does it take to start seeing returns on your investment?

A Three to five years.

 

Marcel van Ruler, Jawitz Properties Roodepoort

Q Why did you choose to open a real estate franchise?

A No specific reason. I always regarded property is a good investment and thought this to be a good opportunity from a business point of view.

 

Q Why did you choose the company you did?

A I had no knowledge about Jawitz Properties but saw the advertisement in the newspaper and responded. After the first meeting with Damon Jawitz I was comfortable that the values I live by aligned with their own and that of their company.

 

Q How long does it take to start seeing returns on your investment?

A It was only after about three years.

 

Q Did you self-fund your start up or did you apply for bank financing?

A I financed from a combination of my own sources and acquired the premises through a bond from a bank.

 

Q Did you find the loan application process was easier due to belonging to a franchise or did this hinder you?

A I did not get the impression from the bank when I applied for the bond; but I can believe that being part of a successful franchise did facilitate the process.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Do your homework thoroughly and make sure that you fit the personality profile required in the industry. Accept that you are a partner in a 50/50 business venture with the franchisor and commit yourself to this. Obviously, working capital and cash flow are extremely important due to the uniqueness of the property industry’s income stream.

 

Brian and Belinda Hickson, Jawitz Properties Midrand

Q Why did you choose to open a real estate franchise?

A I’ve always bought and sold properties for my own personal investment and really enjoyed the industry and experience of buying property.

 

Q Why did you choose the company you did?

A Over many years of buying and selling property prior to me investing in a Jawitz franchise, I found myself purchasing and selling most of my properties through Jawitz Properties at the time, which I found to be a professional company. My service experience dealing with Jawitz was always a positive one and I felt that I was in good hands. I also admired the brand and the image it portrayed in the marketplace, and its agents were friendly, knowledgeable and well experienced in their areas.

 

Q What is the toughest part of starting a new real estate franchise?

A Dealing with the banks was a nightmare and finding good, reliable hard-working agents within our sales area was a long and tedious process.

 

Q How long does it take to start seeing returns on your investment?

A Luckily it didn’t take us too long as the first home we sold was for R7,2m at 6% commission. This really motivated us and helped us through the initial set-up stages.

 

Q Did you self-fund your start up or did you apply for bank financing?

A We self-funded which I believe made a huge difference. I believe if we were totally reliant on the banks to support our business it would have added to the stress and challenge of opening a new business.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Make sure that you’re streetwise, tough-skinned and have long-term financial stability for a minimum period of at least two years. Don’t believe for one minute that becoming a successful real estate agent/company is easy. The real estate industry is a tough and unforgiving business. It is filled with challenges that take a special kind of person who’s dedicated, committed, hard-working and who seldom gives up when the going gets tough.

 

Lew Geffen Sotheby’s International RealtyLGSIR Logo

Arnold Maritz, Lew Geffen Sotheby’s International Realty Southern Suburbs

Q Why did you choose to open a real estate franchise?

A Once the decision has been made to get involved in real estate, the choices are to start independently, or to go the franchise route. They both have pros and cons. The largest drawback of going independently is the length of time it would take to establish an independent brand. It is far quicker to get a franchise office established, and if it is a strong brand, it will immediately be recognised by the market. All the franchise systems become available, including referrals, and it is far easier to recruit agents to work with an established brand. It is thus far easier and faster to establish a business and to get it productive.

 

Q Why did you choose the company you did?

A Having looked at the various offerings, the strength and desirability of the brand, together with the systems and support offered made it a relatively easy choice.

 

Q Was the cost to purchase and licensing fees a major influencing factor in your decision?

A The franchise set-up and initiation costs were not very different for the various franchises on offer, and did not play a very important role in which franchise to choose.

 

Q What has been the toughest part of belonging to a real estate franchise?

A It can take longer to have corporate decisions taken when you are part of a franchise group.

 

Q If there is one thing you could change, what would it be?

A One of the greatest benefits of a real estate franchise group is the passing on of referrals, and we have a phenomenal internal platform for that. But it’s not utilised by all agents. If everyone in the group could grasp the magnitude of the benefit to all, if everyone effectively works with referrals when sending and receiving them, sales would increase even more.

 

Q What is the toughest part of starting a new real estate franchise?

A The success of a real estate franchise office depends largely on the quality of estate agents that work there, and the toughest part of starting a new real estate franchise is the recruitment of good agents, and the ability to then get them to function effectively as a team.

 

Q How long does it take to start seeing returns on your investment?

A Starting a new real estate agency franchise from scratch takes time, and as a consequence, is a capital-intensive exercise. It takes time to recruit agents and to establish a good sales team, and because of the nature of real estate transactions, it takes even longer to start receiving commission for concluded sales. It will usually take at least four to six months to start seeing the first returns, and probably at least 18 months to start seeing proper returns on your investment.

 

Q Did you self-fund your start up or did you apply for bank financing?

A We did apply to banks for financing, but the banks are very risk averse, and we ended up self-funding our start up.

 

Q Did you find the loan application process was easier due to belonging to a franchise or did this hinder you?

A Belonging to a franchise assists in the loan application process, but the banks still put a high priority or weighting on your previous track record in the industry.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Do your homework very thoroughly. Due diligence should include research into the market, the economic forecasts, the competition, speaking to as many franchisees as possible, and making sure that you have sufficient capital in order to source the business for at least six to 12 months from start up. Ensure you comply with all the necessary legal and statutory requirements as stipulated by the Estate Agency Affairs Board, including having all the qualifications in place for at least one Principal agent.

 

Pam Golding PropertiesPGP LOGO 2016

Keimpe Weistra, Pam Golding Properties Brackenfell (Western Cape) and Jeffreys Bay and Uitenhage (Eastern Cape)

Q Why did you choose to open a real estate franchise?

A I have been working for myself since 1993 when I qualified as a Chartered Accountant and I enjoy the satisfaction of creating a new business and growing it to its full potential. I decided to enter the real estate industry in 2003 as I have a passion for property as an investment and I enjoy the various opportunities in this sector. The decision to opt for a real estate franchise was an easy one as it provides a business model, training and marketing support, and an environment of best practices to rely on.

 

Q Why did you choose the company you did?

A Pam Golding Properties is the leading real estate brand in South Africa. It was obvious to consider it first. Apart from PGP’s leading brand status, it provides the best possible training to agents, marketing, customer relations management systems, and management support. The real estate business is all about relationships. Not only with clients and future clients, but, more importantly, the people you work with. With PGP you know you can rely on your fellow agents and managers, even in another office.

 

Q What has been the toughest part of belonging to a real estate franchise?

A I would not call it tough; but living up to the Pam Golding Properties brand’s expectations from clients’ perspectives places a huge responsibility on our business. Through constant training and development of our people this challenge is being met. Also, one needs to take care that the appropriate agents are being recruited and developed to live up to these expectations.

 

Q What is the toughest part of starting a new real estate franchise?

A You need working capital for at least six months from inception, and, similarly, new agents coming into the industry also need to carry themselves for the first four months as they work on a commission basis. Through careful planning we succeeded in navigating through those first months, and we assisted new agents to find their feet quickly in order to generate income as soon as possible.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Investigate the market conditions in the area: how many sales have taken place in 12 months and what is the total value of the sales? Also, have a look at competitors in the area and how they operate. Preparation of a good business plan and cash flow projection is crucial. And choose the best brand with excellent support and training. Talk to other franchisees to establish what their experience is like.

 

Nelson Ferreira, Pam Golding Properties Johannesburg East

Q Why did you choose to open a real estate franchise?

A I am an entrepreneur and enjoy the fact the real estate has more than one avenue of income generation as well as specialisation. The divisions or businesses that you can grow in your real estate business include a residential sales division (full-title, second-hand homes), a sectional title sales division (second hand), a rentals division, a development division specialising in the launch and sales of developments that require bespoke marketing services, and a commercial and industrial property sales and letting division.

 

Q Why did you choose the company you did?

A Pam Golding Properties is an aspirational brand that creates a trust and credibility platform from which to do business with the public. It provides the IT and CRM support and backup that your business and agents need to trade in this marketplace, provides arguably the finest marketing tools and campaigns that ignite public interest and confidence in my business, and provides business support from the franchise sales and operations division. It is comforting to know that you have back up, guidance and support when you need it.

Over and above this, it is a warm, friendly and fun organisation to be a part of, which inspires confidence from my agents and promotes rentention of agents. It has possibly the greatest real-time and online training academy with relevant content that inspires agent performance and skill improvement, and is very selective over which individuals it will sell a franchise to, which makes you feel comfortable that you are working with professionals of the highest standards in and around the country.

 

Q Was the cost to purchase and licensing fees a major influencing factor in your decision?

A No. When you purchase a PGP franchise model, you get what you pay for. I bought my first 15 years ago, and five more thereafter. They have all paid the fee back – between 12 and 18 months of trading.

 

Q What is the toughest part of starting a new real estate franchise?

A Recruiting, training and retaining the right people.

 

Q Did you self fund your start up or did you apply for bank financing?

A Self fund. I would not suggest paying off a loan in this type of business unless you have worked out your cash flow against projected future banked commission.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Select the best, well-known brand with a reputation that inspires confidence from the public. Make sure that you have enough capital and cash flow to open an inspirational office that inspires customers and agents to do business with you, cover setup costs like telephone, internet, furniture, equipment, photocopiers, laptops, and have a marketing fund for launching your business in its market and attracting agents to work for you. Recruit the right administration team to care for your admin and agent support, and make sure you have a great bookkeeper so as to ensure that VAT, PAYE, SDL and administration of your trust account is 100% compliant an in line with the law.

 

Carol Reynolds, Pam Golding Properties Durban Coastal

Q Why did you choose to open a real estate franchise?

A Property is in my blood, and owning a real estate business is the best way of keeping involved in the property industry.

 

Q Why did you choose the company you did?

A I would only consider a leading brand like Pam Golding Properties, otherwise I could simply trade in my own name. The Pam Golding brand is extremely powerful and the company has a very good market reputation, and hence the goodwill that comes with being a Pam Golding franchise is invaluable.

 

Q Was the cost to purchase and licensing fees a major influencing factor in your decision?

A No. For me it was simply a case of Pam Golding Properties or nothing.

 

Q What has been the toughest part of belonging to a real estate franchise?

A The market has been volatile for the past eight years, and hence it is difficult to motivate a team of agents during the dry spells. Again, this is where brand power cannot be underestimated – agents and clients stay with brands they trust, particularly in difficult economic times.

 

Q What is the toughest part of starting a new real estate franchise?

A You require working capital for at least the first four months, after which the transfers take place and the business begins to float itself. In addition, getting qualified is onerous if you do not have any experience or degrees to fall back on.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Ensure you have enough working capital to get through the first year and opt for the best brand. Franchises are valuable because of the brand power behind them – it is futile to start a franchise with a brand that has no goodwill.

 

Rawson Properties Mooikloof14101 RAWSON FC RGB

Sharon Merle McComb, Rawson Properties Mooikloof

Q Why did you choose to open a real estate franchise?

A Land/property throughout history has been one of the pillars that has created financial wealth and Principal Bradley has a passion for this profession which he developed while working in Dubai.

 

Q Why did you choose the company you did?

A First and foremost it is an incredibly strong brand that I feel really stands out from the rest. It has a strong philosophy of being neighbourhood experts and enjoys good national coverage.

 

Q What has been the toughest part of belonging to a real estate franchise?

A There are a number of things we would do differently based on Bradley’s knowledge and experience in Dubai and our own personal value system but being part of a franchise we have to abide by not only the terms of our contract, but decisions made by management.

 

Q If there is one thing you could change, what would it be?

A There are a number of things I would change but I would say the most important would be our initial approach to our target market and employment strategy.

 

Q What is the toughest part of starting a new real estate franchise?

A Establishing a name for yourself in what is a very competitive and, at times, very unethical market.

 

Q How long does it take to start seeing returns on your investment?

A At least three to four years and a lot of hard work and long hours.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Do your homework. Understand the area you purchase in terms of future growth, demographics, competition. You also need to understand the market and the challenges of finding good agents. Ensure the franchisor will offer you the internal support and guidance needed to make a success of your business. Visit other franchisees in the group and don’t blindly follow the sales pitch of the franchisor.

 

RE/MAXREMAX OF SA

Elretha van der Merwe, RE/MAX Kalahari (Kuruman)

Q Why did you choose to open a real estate franchise?

A There was not one in Kuruman and the company was well known. The big mining companies only do business with known companies.

 

Q What has been the toughest part of belonging to a real estate franchise?

A To maintain the standard of service when you expand.

 

Q How long does it take to start seeing returns on your investment?

A Three years.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Make sure you don’t have to take out of the business for the first three years and get involved with the community. Give your time, not your money.

 

SeeffSeeff Logo without PROPERTIES - Rectangular (1)

Steve van Wyk, Seeff Centurion

Q Why did you choose to open a real estate franchise?

A I came into the real estate industry purely by chance. A friend of mine informed me that the Centurion branch was for sale and, after looking at the numbers, I invested in the business. First 50% and six months later I bought the balance.

Q Why did you choose the company you did?

A Being from Cape Town I knew the Seeff brand well and knew it was a reputable brand with which to associate.

 

Q What has been the toughest part of belonging to a real estate franchise?

A Not necessarily always being free to venture into other revenue opportunities as we are bound by our licence agreements.

 

Q What is the toughest part of starting a new real estate franchise?

A The toughest part was trying to understand the business. Luckily, fellow licensees were prepared to offer assistance. The regulations regarding admission and audits from the EAAB are quite stringent.

 

Q How long does it take to start seeing returns on your investment?

A In my case it took 18 months to get the cash flow positive, but it could easily take longer depending on the market.

 

Q What advice do you have for people wanting to start their own real estate franchise?

A Only join a reputable company. Try to self-fund and make sure the effort is worthwhile. Scrutinise the last three years’ financials carefully. This job requires you being available 24/7. It can be emotionally draining with clients and agents, so focus your efforts on training, motivating and recruiting good agents and admin staff.

 

Charles Vining, Seeff Sandton

Q Why did you choose to open a real estate franchise?

A Because I wanted our business to be associated with an approved and highly-respected brand.

 

Q Why did you choose the company you did?

A Seeff has been an established, trustworthy brand for over 50 years.

 

Q Was the cost to purchase and licensing fees a major influencing factor in your decision?

A Yes it was. However there was value gained within the support received by joining an established brand.

 

Q How long does it take to start seeing returns on your investment?

A After about five years.

david.steynberg@gmail.com

David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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