Want to become a franchise brokerage for a national brand? Here’s what it costs

Want to become a franchise brokerage for a national brand? Here’s what it costs

Tuesday, January 2, 2018

Screenshots from Realtor magazine’s annual franchise report

From TRD New York: Thinking of flying Warren Buffett’s flag to boost the profile of your bootstrapped brokerage? It’ll run you $25,000.

That’s how much it costs to become a franchisee of Berkshire Hathaway HomeServices, the conglomerate’s real estate franchise network of over 1,200 offices across the U.S. Earlier this year, Berkshire Hathaway came to New York City, traditionally a fiefdom of independent brokerages but still a market in which franchise brands have a substantial footprint.

A third of the 32 franchise companies in Realtor Magazine’s annual franchise report has a presence in the New York area, with a strong showing in the outer boroughs. The report breaks down the costs associated with becoming a franchisee of the biggest brands.

The largest brand with a New York presence — Century 21 Real Estate — has 2,216 offices around the country and 128 in the metro area, with a concentration in Brooklyn and Queens. Century 21 franchisees pay royalties of 6 percent of gross revenue per transaction, plus a marketing fee (2 percent of gross revenue) and a training fee of $399 per attendee.

Other big names nationally with a foothold here include Weichert Real Estate, which has offices in Soho and in Rockefeller Center, and Keller Williams, which has eight offices in the city. Keller Williams charges franchisees a 6 percent royalty fee (capped at $3,000 per agent per year) as well as a $1,000 per office annual marketing fee, a technology fee ($79 per office), an educational fee ($299 to $2,500 per course) and a $500-per-office fee for KWConnect, an online training portal.

What’s less clear is how much of a benefit being attached to a national brand really has in New York. Last year, The Real Deal analyzed the pros and cons for New York firms making alliances with national brands. The verdict was mixed.

Following is a list of brands with a New York presence and the going rates to open a franchise.

Better Homes and Gardens Real Estate
$35,000 (first office) and $10,000 (branch)

Engel & Völkers North America
$35,000

Keller Williams
$35,000

EXIT Realty USA
$32,000 (urban) and $7,500 (rural)

Berkshire Hathaway HomeServices
$25,000 (first office) and $2,500 (branch)

Century 21 Real Estate
$25,000 (first office) and $10,000 (branch)

Coldwell Banker Real Estate
$25,000 (first office) and $10,000 (branch)

Sotheby’s International Realty Affiliates
$25,000

Weichert Real Estate Advisors
$25,000

HomeSmart International
$20,000

NextHome
$2,750 to $6,750

Flat Rate Realty
$1,995

You can find the full Residential Franchise Report here.


Source: The Real Deal