PROPERTY NEWS - Running your own property business is not something you can jump into without a bit of preparation, says Walter Hart, the Rawson Property Group's business expansion manager.
He provides advice on the most important factors to consider, and explains the benefits of joining a national brand instead of starting out completely on your own.
“Most prospective franchisees spend a lot of time weighing up the pros and cons of buying a franchise versus building their own brand,” says Hart. “There is something very enticing about having your own name over the door, after all. In most cases, however, the benefits of joining an established, national brand far outweigh the potential of an independent agency.”
Benefits of joining an established brand
According to Hart, these benefits include instant brand recognition, access to a broad (and often very profitable) referral network, experienced and ongoing business and marketing support, proven technology and in-house training, and a community of like-minded peers.
Benefits of joining an established brand
According to Hart, these benefits include instant brand recognition, access to a broad (and often very profitable) referral network, experienced and ongoing business and marketing support, proven technology and in-house training, and a community of like-minded peers.
Finding, training and retaining good agents is also far easier with the backing of a respected franchise brand, while those with a long-term outlook will appreciate the enhanced saleability of a branded agency down the line.
“The different franchise brands all provide different levels of training, technology and facilities,” Hart points out, “and charge different combinations of license acquisition fees, royalties and marketing contributions. That can make it difficult to decide which brand is best for you, so pay very close attention to what you’ll be getting in return for your money. The cheapest options aren’t always the best value at the end of the day.”
Legislative requirements
Of course, selecting a brand isn’t very helpful if you don’t have what takes to get your franchise application approved. Legislation requires very specific qualifications and certifications, and the financial requirements can be extensive as well.
“In order to own and operate a real estate business, you need to complete your NQF5 qualification and get a principal-level Fidelity Fund Certificate from the EAAB,” says Hart. “If you’re just starting out in the industry, this can take as much as two to three years, so it’s important to get the ball rolling as early as possible.
“As for the financial side of things, you need to budget not only for your franchise license and associated fees, but also for the ongoing operational costs of doing business until you become cash flow positive. If you’re purchasing an existing franchise, this may only take a few months, but new franchises – and independent agencies – can take anywhere from six to eighteen months to see a profit.”
Selecting the right territory
Hart points out that the territory in which you choose to operate can also directly affect your income potential and path to profitability. This makes selecting the right area a vital part of any real estate business owner’s success.
“The different franchise brands all provide different levels of training, technology and facilities,” Hart points out, “and charge different combinations of license acquisition fees, royalties and marketing contributions. That can make it difficult to decide which brand is best for you, so pay very close attention to what you’ll be getting in return for your money. The cheapest options aren’t always the best value at the end of the day.”
Legislative requirements
Of course, selecting a brand isn’t very helpful if you don’t have what takes to get your franchise application approved. Legislation requires very specific qualifications and certifications, and the financial requirements can be extensive as well.
“In order to own and operate a real estate business, you need to complete your NQF5 qualification and get a principal-level Fidelity Fund Certificate from the EAAB,” says Hart. “If you’re just starting out in the industry, this can take as much as two to three years, so it’s important to get the ball rolling as early as possible.
“As for the financial side of things, you need to budget not only for your franchise license and associated fees, but also for the ongoing operational costs of doing business until you become cash flow positive. If you’re purchasing an existing franchise, this may only take a few months, but new franchises – and independent agencies – can take anywhere from six to eighteen months to see a profit.”
Selecting the right territory
Hart points out that the territory in which you choose to operate can also directly affect your income potential and path to profitability. This makes selecting the right area a vital part of any real estate business owner’s success.
