P1 | Branding Differentiation
I’ve spent more than 15 years studying most of the major real estate franchises.
I’ve worked at a few of the biggest brands on the planet as an agent.
I’ve looked under the hood and kicked the tires of many a real estate brand. In fact, I nearly purchased a franchise of three of these brands.
I helped roll out a Big 5 brand in my home state and watched it grow from nothing to 3,000 agents in just five years.
And the things I learned along this journey have provided me at least a reasonably credible basis for making the points I’m about to make.
Those things being said, here are the primary ways that the Professional One Real Estate franchise model differs from *most* of the real estate franchises in existence today:
Branding Differences…
- Direction | If you look around, you’ll see that *most* of the big-box brands have directed their value propositions at brokers and or agents. We think that’s the wrong approach, and we believe that’s one of the primary reasons that people don’t see differences among the “big 5″ brands. We, on the other hand, have directed our our branding on the actual CLIENT. Our focus is on creating a brand image that first and foremost attract buyers and sellers of real estate…the REAL lifeblood of a successful real estate operation.
- Consistency | We aren’t for everyone. We don’t want to be. Why, you may ask, would we intentionally limit our growth by forcing people to adhere to our strict branding strategy? Here’s why: because the branding message gets DESTROYED when you let every agent brand him or herself individually. If you don’t think photos of babies and balloons and pets diffuse and confuse a brand image, you are grossly mistaken. And if you want proof, just look at NAR’s own stats, which show that only 3% of people surveyed indicated that brand was the “most important” factor in selecting an agent! This is the unfortunate result when a “brand” is actually a collage of thousands of individual agent’s conflicting branding strategies all cobbled together: a generic, neutered mess that looks about the same at all of the big brands.
- Equity | Precisely because (1) our barrier to entry is so high, (2) the public’s perception of real estate is so low, and (3) our branding message is going to be so tightly controlled, we believe we can and will be the first brand in real estate to create a “brand that matters.” Inconsistency is the killer of brand images. By controlling the quality of our agents and the consistency of our branding message, we believe we will create legitimate brand equity.
Philosophical Differences…
- “Small-box” | In our opinion, the #1 cause of real estate brokerage failure is this: TOO. MUCH. OVERHEAD. Exhibit A? Too much brick-and-mortar. You do not need a “big box” office. In fact, we strongly suggest you stay below 1,500 square feet. Having a manageable, reasonable level of expense burden frees a broker to earn a respectable return on investment with a fairly modest number of moderately producing agents. This is 180 degrees from the traditional, bloated model of high-overhead/massive-agent-count-needed-to-survive that is the primary cause of financial ruin in real estate today.
- Big territories | “Big reason #2″ why brokers fail: Over-saturation of the market by their franchisor. This, we feel, is the biggest mistake others franchisors make. When a franchisor sells 10 – TEN! – franchises within a 5.5 radius of a single point (the list at right is an actual example in our market; note that this list excludes a location in downtown Northville, MI which went bankrupt in March of 2009), they are not exactly positioning each of those franchisees to succeed individually. Most franchisors give “protected territories” of one square mile, give or take. Our territories are negotiable and are much larger.
- Quality, NOT quantity | It is often said that “recruiting is the lifeblood” of every successful real estate brokerage. Not so in our model. Because we mandate a “small box” office operation and because we have no financial incentive built into the system that encourages the “any warm body will do” mentality that so many other franchises do, there’s simply no reason to engage marginal performers (and, quite frankly, our high barrier to entry won’t allow that anyway!). We believe your focus should be on one key metric: “RPA,” or “revenue-per-agent.” This puts broker and agent on the same page.
Financial Differences…
Royalty | If you do the research, you’ll find that *most* real estate franchisors charge a royalty rate in the 6%+ range, and many have additional fees on top of that. Ours rates are lower. The hard reality: real estate profit margins are at all time historical lows. The ONLY way the franchisor/franchisee dynamic can continue in real estate is if franchisors recognize this reality and act responsibly.- Residual | It’s impossible to convey this in just a few brief sentences, but here’s all you need to know: we studied every residual income model in real estate and created a model that soundly trumps the competition. Ours is – objectively – the most powerful. It’s based on gross commission income, it’s not affected by office or company profitability, it’s completely calculable, verifiable and auditable, and it produces meaningful results even at low levels of participation.
- Bonuses | In your early stages of growth as a franchisee, we give you a greater chance of financial success by (1) giving you back a portion of the “excess residual,” and by (2) giving you a portion of the excess residual from other franchises you help us identify. In a start-up situation, having these ancillary forms of income can be crucial. These points are amplified even greater for franchisees who are first into a state (such visionaries have the greatest economic upside).
These are the primary ways that the Professional One Franchise model is unique…
We think our differences are significant departures from the status quo…
We think our differences position us to compete successfully over the long haul…
Step up…
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